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From Banking and Finance Law Daily, October 17, 2014

President Obama signs executive order to enhance payment security, prevent identity theft

By Charles A. Menke, J.D.

President Barack Obama has signed an Executive Order aimed at preventing identity theft by directing the federal government to lead by example in securing transactions and sensitive data. The order is part of the Obama Administration’s BuySecure Initiative that will give consumers more tools to secure their financial future, including assisting victims of identity theft, improving the government’s payment security as a customer and a provider, and accelerating the transition to stronger security technologies and the development of next-generation payment security tools, a White House release stated.

Payment security. The Executive Order implements new policies intended to make payments to and from the federal government more secure by applying chip and PIN technology to newly issued and existing government credit cards, as well as debit cards such as Direct Express. The order also directs that retail payment card terminals at federal agency facilities be upgraded to accept chip and PIN-enabled cards.

In addition, efforts from the private sector will assist in moving the market towards more secure payment systems, the White House stated. Home Depot, Target, Walgreens, and Walmart plan to launch secure chip and PIN-compatible card terminals in their stores early next year. Meanwhile, American Express plans to start a new program to support small businesses in upgrading their point of sale terminals and Visa will launch a new program to educate consumers and merchants on chip and other secure technologies.

Identity theft remediation. In order to assist identity theft victims, the President’s order directs the Department of Justice, Department of Commerce, and Social Security Administration to assist the Federal Trade Commission in the identifying, streamlining, and consolidating resources for victims. In addition, the Office of Management and Budget and the General Services Administration will assist the FTC in enhancing the functionality of its website, IdentityTheft.gov, by coordinating with the credit bureaus to streamline the reporting and remediation process with credit bureaus' systems.

Securing federal, online transactions. In order to safeguard the sharing of sensitive data, the President’s order directs the creation of a plan to ensure that agencies making personal data accessible to citizens through digital applications employ multiple factors of authentication and an effective identity proofing process.

Summit, legislation. The President also announced a White House Summit on Cybersecurity and Consumer Protection would take place later this year. The Summit is intended to promote partnership and innovation by bringing together major stakeholders on consumer financial protection issues to discuss how all players in the financial system can work together to further protect American consumers and their financial data.

In addition, the President repeated demands on Congress to enact cybersecurity legislation to protect consumers, especially by clarifying the obligations of businesses in the event of a data security breach.

Reaction. Federal Trade Commission Chairwoman Edith Ramirez “welcome[d] the opportunity” for her agency to participate in the President’s initiative noting that “[i]dentity theft has been American consumers’ number one complaint for more than a decade.”

The American Bankers Association applauded the President’s action stating that “banks, payment networks and retailers are working together to make chip cards and readers widely available.” The group added that it “look forward to working with the White House, Treasury, Commerce and Homeland Security to share our best practices and new technologies that will aid in the fight against fraud.”

Companies: American Bankers Association; American Express; Home Depot; Target; Visa; Walgreens; Walmart

MainStory: TopStory CreditDebitGiftCards IdentityTheft Privacy

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