How to Make Your Credit Card Safe, Remotely
| published August 12, 2014 |

By Thursday Review staff

One of the dramatic changes brought to us by way of last year’s massive Target data breach was an accelerated approach to credit card and debit card security in the United States. The U.S. has lagged measurably behind the rest of the world in credit card technology for decades. During the last dozen or so years, the U.S. fell even further behind—especially trailing Europe, Canada and several Asian countries whose conversion to smart cards, chip embedded cards and encrypted cards was completed years ago.

Amid much worldwide publicity, the American retail security gap was exposed when hackers stole the personal data of more than 70 million Target shoppers between November and December 2013. Later that same month, similar attacks compromised the private information of millions of Neiman Marcus and Michael’s customers. In all three cases, thieves apparently collected account numbers, addresses, landline and cell phone numbers, account balances, credit limits, and even PIN numbers, all without leaving a trace.

In fact, none of the holiday season breaches would have been possible had banks, credit card companies, financial institutions and ATM and card-swipe vendors not delayed—for years—the inevitable conversion to newer cards.

Encrypted credit and debit cards have been in widespread use in Canada, the United Kingdom, and many EU countries for several years, and law enforcement agencies in those nations say that the newer, smarter cards have greatly reduced hacking and card fraud. The encrypted cards have also led to a substantial drop in reports of fraudulent charges and identity theft—problems which can cost businesses millions each year and land individuals into long-lasting financial problems.

Encrypted cards and other smart card technologies reduced card fraud in Britain and Canada by nearly 60% within the first 24 months. Security analysts and law enforcement officials say that the same decrease could happen in the U.S. once the changes to technology are completed.

Now, in addition to cards with embedded microchips and encryption tools, some newer cards being developed and tested will contain a tool which will allow the account holder to deactivate the card instantly—simply by using an app on a cell phone or computer. In essence, the credit card of the future can be turned on or off, by you.

The software is called CardControl, and it is made by a company called Ondot Systems. Ondot says that CardControl is ideal for a variety of customer convenience issues. For example, a card issued to a teenager or college student can be activated and deactivated by the parents, easily and conveniently—in real time and without the hassle of calling the bank or credit card company (good luck with getting a human on the phone anyway). Cards can also be activated for caregivers, sitters or family members handling the finances of sick or elderly relatives, and if nothing else—Ondot explains—cards can simply be left inactive until it is time to make a purchase.

From a safety and security standpoint, the advantages are obvious. When a customer discovers a card has been misplaced, lost or stolen, the card can be instantly turned off. Since the card cannot be reactivated without use of the app and a set of security questions and password, no transaction can be completed. Account holders are alerted on their cell phone if there is an unauthorized attempt to use the card—or the card number. For most consumers, this arrangement would be a no-brainer: a card can remain turned off, and can then be activated at the time of a legitimate purchase. Cash advance limits can also be set-up, and adjusted only by the account holder in an emergency.

CardControl also allows for setting up specific preferences, such as geographical limitations, spending limits, and even stores which are off-limits (retail or online). Example: a card issued to a college student living in Tuscaloosa, Alabama could be enabled for purchases at certain gas stations, grocery stores, bookstores and convenience stores along a specific corridor near the college, and along the drive back home. But the card would not be authorized for purchases or expenses at hotels, bars or nightclubs in Panama City, Florida.

The CardControl app—and similar competing products—is already available through thousands of banks and credit unions now, and is expected to be widely available soon across the country.


Related Thursday Review articles:

In Search of a More Secure Credit Card; R. Alan Clanton; Thursday Review; February 19, 2014.

Who Pays for the Target Breach?; R. Alan Clanton; Thursday Review; January 15, 2014.