Electronic fraud

Tuesday, June 16, 2009 | 2:04 a.m.

Despite what credit card companies would have you believe, the computer networks that handle transactions are vulnerable to hackers.

The Associated Press reported that since 2006, more than 70 retailers and credit card companies have reported security breaches, including one that left 100 million accounts exposed to thieves. Experts say there are likely many more breaches that have gone unnoticed or unreported.

In an analysis of industry records, the AP found that companies that deal with credit card transactions haven’t taken sufficient precautions to ward off identity thieves.

In 2006 a group of major credit card companies formed the Payment Card Industry Security Standards Council to set uniform security rules for merchants. Most merchants — 93 percent of large retailers and 88 percent of mid-size ones — have complied with the standards. But the standards aren’t terribly rigorous, requiring the installation of basic software and an annual test of the security system. The standards allow more than 99 percent of retailers to test and evaluate themselves.

The credit card industry has balked at taking steps to increase security levels, such as encrypting all data it sends over computer networks, because it says added measures would be too expensive and would slow customer transactions. The companies are taking a risk at the expense of millions of card holders. Apparently, a little fraud is just the cost of doing business, but it is disastrous for the customer who is victimized.

Considering how much of the economy is made up of credit and debit card transactions, that is unacceptable. If the credit card industry won’t improve standards, the federal government should step in to protect consumers.