Financial services company unveils new safeguard vs. ID theft

Financial services company unveils new safeguard vs. ID theft

More than anything else, identity theft is a crime of opportunity. If a particular credit or debit card number doesn't have any apparent value, a thief won't even bother using it. That's why CardLock, a new service developed by PSCU Financial Services, could be an effective way for consumers to keep their credit card accounts from being compromised.

Lock and unlock card with a phone call
According to Credit Union Times, PSCU's technology allows a consumer to lock credit cards with a single call from a cell phone. When individuals want to make legitimate purchases, another quick call unlocks the card before they reach the checkout line. Regular scheduled monthly charges, such as utility payments, will still go through, however, even if a card is locked.

PSCU is quick to point out, though, that subscribing to the CardLock service does not make an identity theft victim any more liable for bogus charges. CardLock simply gives consumers a quick and effective way to make their accounts less attractive and less vulnerable to being compromised.

Based in St. Petersburg, Florida, PSCU is a credit union service organization (CUSO) owned by more than 600 credit unions, which makes the CardLock technology even more exciting. If a significant number of credit unions and banks offer this kind of protection to their clients, there could be a sharp decline in identity theft in the near future.

Reducing hijacked merchant accounts
Credit cards are only useful if the numbers are valid and the available balances are large enough to make high-ticket purchases. Last month, The Washington Post published an intriguing article about cyber thieves and hijacked merchant account numbers. By using these account numbers to issue small pre-authorizations, thieves could determine the "street value" of stolen credit cards. Pre-authorizations won't be approved, though, on a locked account, which makes CardLock a great protection for merchant accounts as well.

CardLock sounds really good on paper, but what about during a transaction at a busy checkout? The Credit Union Times article documented a field test performed by PSCU in which pre-selected shoppers tried to make purchases with locked cards. After their transactions were declined, the testers unlocked the cards and the sales were processed. Ideally, using CardLock should not slow down a busy checkout line.

Reducing fraudulent chargebacks
PSCU's CardLock service also provides additional protection against chargebacks, which happen when a consumers dispute charges on their credit card bills. The disputed amounts are credited back to the consumer's account, leaving the burden of proof on the merchant. While the charges are under investigation, the funds plus additional fees are deducted from the business owner's merchant account.

Many chargebacks are the result of stolen credit cards and identity theft. By making technologies like CardLock standard for banks and credit unions, merchants will have less trouble with chargebacks, even the ones that result from a bad case of "buyer's remorse." On sales where consumers have to intentionally unlock a card, a merchant will have more protection if a buyer fraudulently disputes a legitimate purchase.

Consumers still need caution
Still, CardLock is not a cure-all for identity theft. When using this service or a comparable product, consumers need to safeguard their lock and unlock codes and, if a cell phone is stolen, the codes must be changed immediately.

Published: September 14,2023