Video: Credit card holders fret over breach

By Correspondent
NBC News
updated 6/28/2005 8:15:10 PM ET 2005-06-29T00:15:10

NEW YORK — Headlines on June 17 screamed of a massive security breach: “40 million credit card accounts exposed to potential fraud,” “200,000 known to be stolen.”

But the banks that issue the cards are telling customers not to worry.

“Here's what bothers consumers: Are you in this list, yes or no?” says Bob Sullivan, a technology writer with MSNBC.com and author of the book “Your Evil Twin: Behind the Identity Theft Epidemic.” “That’s the only question they want the answer to.”

Consumer advocates are dismayed that many card issuers have chosen to keep customers guessing about whether thieves will charge cards up to their limits.

“Is this card I'm holding going to be useful to me or not the next time I go out shopping or the next time I take a business trip?” says Beth Givens with the Privacy Rights Clearinghouse.

The card companies say customers won't be held liable as long as they report fraudulent purchases. But many are still wary.

“You still need a credit card to prove that you're a person now,” says Shoshanna Cooper in New York City.

“What are you gonna do?” echoes fellow New Yorker Phil D'Abbrachio.

Federal law does not require banks to tell customers when their account information has been stolen. There are guidelines, but consumer advocates and ID theft experts say they're too weak.

“Consumers have the right to know,” says MSNBC.com's Sullivan. “A lot of consumer advocates do as well.”

And there's a reason, they say, customers aren't being told.

“Banks don't want to do it because its' costly to inform everybody and re-issue all those cards,” says Sullivan.

Meanwhile, federal banking officials are investigating the breach. They acknowledge federal guidelines are not as strong as law, but maintain they do benefit consumers.

“Our guidance is pretty clear that institutions, if misuse has occurred or if it's reasonably possible that misuse will occur, they have to notify customers,” says Sandra Thompson with the Federal Deposit Insurance Corporation.

But while American banks and consumers grapple over disclosure, a foreign bank settled the issue quickly. When the National Australia Bank discovered some of its customers were at risk, it closed the accounts and issued new cards.

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