“Hackers are exploiting Internet auctions, money transfers like Western Union and PayPal, the ability to impersonate lottery and sweepstake contests, and other types of imaginative scams,” said Litan. “They’re going after the weakest links, the consumers using social engineering tactics, and the U.S.’s payment systems at retail and businesses.” “Banks eat the fraud there,” at least for now, said Litan.
A Massachusetts state lawmaker, however, has proposed a bill that would hold retailers financially responsible for breaches. “The retailers are already paying for fraud” in the form of higher interchange charges, Litan said. She offered up examples of how that might be done, including more sophisticated authentication on debit cards and payment processors relying on identity scoring systems that were able to spot thieves using indicators like physical location.
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