Senate committee hears testimony on data security and fraud
LANSING - The Senate Banking and Financial Institutions Committee today heard testimony regarding data security and fraudulent activities, such as identity theft.
"We have been hearing a lot lately about the growing crime of fraud and how it causes financial devastation for its many victims," said Richardville, R-Monroe. "We also know that these crimes do not just impact the victims who have their credit or debit cards stolen. The banks and credit unions who issue the cards are also subject to losses incurred through fraudulent transactions."
Stolen credit or debit card information is a critical issue for all financial institutions, said Alessandro DiNello of Jackson, executive vice president of Flagstar Bank.
"The growth of the Internet and electronic commerce has made compiling and selling sensitive personal information easier for a multitude of companies and crooks, creating a need for comprehensive data security legislation," DiNello said. "We must focus on stopping the misuse of consumer information and create an incentive for companies to make securing customer data a priority. Financial institutions play no part in the cause of breaches, yet they are fully liable for fraudulent charges and for the majority of costs required to reissue compromised cards."
DiNello recommended that retailers responsible for the data security breaches should provide better protection for consumers and be held accountable for costs associated with reissuing cards and fraudulent transactions.
The committee also heard testimony about the various types of fraudulent activities involving local financial institutions in and around Monroe County from members of the Monroe County-City Fraud Group.
"Even in a small city like Monroe, many fraudulent activities occur," said Detective Bret Ansel of the Monroe Police Department. "These problems require much time to investigate, and it's discouraging because not much can be done once the transactions have taken place. That's why we formed this group - to help educate citizens about what is going on."
The Monroe County-City Fraud Group meets with organizations within Monroe to help make them more aware of prevalent problems. Several perpetrators have been caught as a result of the group's commitment to education.
"The scams are a lose-lose situation for everyone involved except for the scammers," Ansel said. "We need to get the word out, and that is what we're trying to accomplish."
Posted: Wednesday, May 30, 2007
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