Blog post from Stripe:
https://stripe.com/resources/more/what-is-a-card-account-upd...
It's bad service from GP's card company though, with network tokens they should be able to see which specific token was abused, and revoke just that one.
like
Visa: Visa Account Updater (VAU) https://developer.visa.com/capabilities/vau Mastercard: Automatic Billing Updater (ABU)
it worked fine for sometime, but the problem is that now the stolen credentials are being refreshed now as well.
If it was leaked somewhere else, i think they wouldn't bother logging in some unrelated account of mine in an ecommerce website.
It's called Automatic Billing Updater (ABU)
the idea is that if you ask for a new credit card after being stolen, your say utility providers or other like netflix subscriptions can seamlessly switch over to the new credit card number.
it worked fine for a while, but of course the problem is that afterwards the stolen credit card credentials started to be refreshed as well.
(used ai to fetch the list below).
Visa: Visa Account Updater (VAU) Mastercard: Automatic Billing Updater (ABU) American Express: Cardrefresher General: Recurring Payment Tokenization
Settlement the part where the bank agrees to transfer money from your account (in this case increasing your debt on the card) to the merchant is completely separate from Authorization.
Authorization is the modern EMV ("Chip and pin") authentication, the CVV stuff for online, and any other mechanism by which the bank protects themselves from your fraud and, maybe, as an afterthought protects merchants.
The network is completely OK with Amazon saying here's a card number, we say they're paying us $400. That's just a settlement, goes on your bill. No sophisticated cryptography, nothing even as clever as a 4 digit PIN, or remembering your mother's maiden name, just OK, we trust you. Which means you, as a consumer, need to read your credit card bills and dispute anything you don't recognise or you'll pay.
There is very little incentive for the networks to care if you get ripped off. If you don't dispute it then everybody is happy, and if you do they just claw it back from the merchant and it's not their problem.
1) https://stripe.com/newsroom/news/card-testing-surge
2) https://stripe.com/blog/the-ml-flywheel-how-we-continually-i...
3) https://docs.stripe.com/disputes/monitoring-programs#enumera...
Enumerating CVC2 with a single PAN is a different story.
So an enormously good anti-fraud mechanism is severely handicapped.
It’s really frustrating for most of the rest of the world.
I don’t get it, do US citizens prefer being defrauded over what is perceived as a slight inconvenience?
Even for non-victims of fraud, they still pay for the fraud as all merchants up the prices of their goods to cover fraud costs/insurance.
Back when credit cards were first starting out (which happened in the US) the US Congress passed a law- the Fair Credit Billing Act of 1974- that consumers were only liable for $50 of losses as long as they reported the missing credit card within 60 days of the end of the fraudulent billing cycle. This was back when credit cards purchases were all made on paper with the machine that went "kachunk" and transferred a carbon copy of your card- everything was done completely offline. That law has not been changed, in fact, most banks completely waive the $50 and don't hold card-holders liable for anything reported (basically, annoying a customer over $50 isn't worth it to the bank). Thanks to the internet, suddenly cards got a lot easier to steal and a lot easier to exploit- but banks are still on the hook for all losses reported within 60 days of the end of the cycle. The result is that American banks have invested an enormous amount in real-time monitoring of credit card transactions, and are doing lots of stuff to monitor this- they care deeply since ultimately they are on the hook- but the consumer doesn't care. This is why US card's from the consumer perspective are so much laxer, because our banks have invested far more on the back-end because the consumer is held harmless in a way they aren't with European cards.
As a totally separate issue, the EU has regulated the amount of interchange fees that card-companies can charge, but the US has not capped them. The result is that US card-holders can get significant kickbacks for using cards (especially true for the top decile of wealth), in a way that is functionally impossible with EU issued cards that have capped interchange fees. There is a big lawsuit happening now to try and allow merchants to only accept low-fee cards (the standard VISA/MC/AMEX deal requires treating all cards equally, which gives them an incentive to push people to higher interchange cards). We will see what happens with that suit, but until then, American high-spenders can have much higher rewards on their cards, which also encourages greater use of the cards- and making them have less friction than the EU versions.
It’s the same reason credit card issuers are willing to pay Apple a few basis points to participate in Apple Pay: reducing friction has a non-linear impact on propensity to pay.
They could, but it's one of those things that really only work if everybody joins. Because 3DS is rarely used right now, a portion of merchants don't even support it, so if you start enforcing is as a single bank, your customers will start complaining their card doesn't work. The banking industry in the US is also more decentralized than in the EU, so getting everybody to join in simultaneously is hard.
The window of opportunity for 3DS has also more or less passed, the industry is moving on to the next generation of tech (wallets/tokenization), that should be both easier to use and more secure.
Do you think we are requesting to have less secure payment methods or something?
No, we don't "prefer to get defrauded", but things like this are a matter of negotiation between the card issuers and the merchants.
Not necessarily, the EU has mandated strong customer authentication by law (PSD2), and as a result has practically universal 3DSecure support.
I suspect that banks and merchants would lobby against it due the work involved. After all, they’ve already marked up their services and goods to cover the cost of fraud/insurance. So right now they don’t pay the cost of it, instead all their customers do through higher prices than they would otherwise have needed to pay.
That's not obviously true. Adding security would likely reduce fraud, but would also make transactions more difficult and time consuming, and may also make recovering from fraud more difficult and time consuming.
The costs may not justify the benefits.
They also report account closures to ChexSystems, which can make it harder to open accounts at other banks for years. Credit card issuers can drop you and ding your credit. Definitively not your fault, but still your problem, and the consequences are for you.
I know that I am naïve :)
Back to the article: Weak point was a password that lead to another merchant not using 3D secure.
It seems from the article that bad actors have fully automated system, so (big) merchants should have handle automatic login attempts from the same ip address with different accounts. I see it from our wordfence logs that ip rotation is not so quick so it could be handled with some permanent ip blocking.
>Weak point was a password that lead to another merchant not using 3D secure
Well leaking a password shouldn't cause leaking a whole ass credit card data imo. The same data is printed on physical receipts the markets print, sometimes 4 digits, sometimes 10 digits. It's still possible to brute force from unattended physical receipts on the market.
Robinhood absolutely nails this. Best virtual credit card system I have ever used. So seamless. Can auth a card for one time use, 24 hours, or indefinite until you cancel. Such a great UI / UX
>I got the money back via chargeback in short time.
So as evidenced, you are protected by the fraud infrastructure. The bank ate the loss for the fraud and you were made whole. In the end, the banking system cares about fraud loss. And they are exceptionally good at finding the fraud. Making changes to the card payment system is extremely difficult, due to the vast scale of the systems, so without a very good justification that a particular change will move the needle on fraud rates, the banks will opt to not make the changes.
All consumers collectively pay for all the fraud, it’s just that we don’t tend to realize it as it’s not a specific line item on any of our bills, instead we all pay just a little more than we should for everything we buy.
My experience with ebay (stolen credit card) in particular was that things were going well until e-bay sent their stack of paperwork to my bank. Then my chargeback was reversed and shortly after that even my bank account was closed.
So you're not in the clear once you get your chargeback back. That is done initially while they give the other party time to respond. I think it took 30 days or so for ebay to bury me in paperwork, get the chargeback unwound again, and their schpeel was so effective that my bank themselves then accused me of being the fraudster.
As for
> The bank ate the loss for the fraud
I'm not 100% that's true. The entire reason why the chargebackee wants to contest it is because either the chargebackee or the chargebacker is eating the loss. The bank isn't eating that loss. There is no way E-bay would have bothered contesting my chargeback and paying their white collar workers for professional time researching if the bank was just going to eat it.
Most merchants won't. But if they do, your bank isn't going to bat for you. If it looks like it's going to take them much time or effort to deal with it they're liable to just throw up their hands and let you duke it out in small claims court.
In my case they had a megacorp ready to fight it on one side, and little old me on the other. So some lady on the phone just insinuated I was a lying scammer and told me my case had been reversed. There was some sort of appeal process I tossed my hat into but it went straight to radio silence and I've not heard from them in years. I would have taken them to court but I moved cross country around the same time and it would cost me $2000 or so for airfare and hotel rooms to show up to the right courts to get $1000 in judgements.
They stole my credit card and used the bogus "me" ebay account to generate invoices (to my real address) and payments for goods from the second scammer merchant account. Then they found tracking numbers to my zip code. They bought the (fake) items from their scammer merchant account using their scammer "me" account. They used those tracking numbers to show the items were shipped and received to someone in my zip code (which is the only publicly available data from the tracking number). Of course, at no point were any of the goods "purchased" by "me" even real, but rather just ways to wash the credit card returns.
When I discovered what happened, I requested ebay refund it. Ebay claimed that since the accounts weren't actually mine (only in my name) I had no right to request a refund. So I could claim they were mine and then be ineligible for a refund because the underlying reason would be vaporized, or not claim them as mine and then be unable to ask for a refund because it's not actually my account -- a catch 22. The tracking numbers, again, since they weren't actually to me, the shipping companies refused to reveal the underlying data to me and I couldn't get any of the evidence showing it wasn't me.
At that point, I had my bank do a chargeback. Which they initially granted. I thought it was a done deal at that point.
Ebay sent all these invoices matching my name, with tracking numbers to my zip code, with my credit card being billed, etc to my bank along with a bunch of pages of banking mumbo jumbo about how the chargeback was wrong. At that point my bank turned face, called me a liar, and reinstated the charges. Not long after this, I noticed e-bay shut down the scammer account but they never refunded me the money. I assume the scammer had sucked out the money faster than e-bay could act to claw it back and when e-bay realized they'd be holding the bag they decided to dump it on the fraud victims.
I initially thought the sms itself was phishing, but after checking online, the sms format matched and the bank webpage ensured the feedback process will not ask for any information so we proceeded to confirm that we did not purchase anything.
The bank immediately cancelled the card and shipped a new one.
My initial thought is that the bank safety system could be overreacting, but it was likely that someone was doing exactly what is described in this article and the bank detected it earlier.
I guess the real question here is how are they able to steal from you? Were they purchasing gift cards from a merchant with lax security?
It’s one thing to guess a number it’s another thing to get the money out of the system
That really depends on the processor; many processors do allow merchants specify your acceptance rules in quite deep detail.
There's a bit of a dichotomy in the processor market: on one side you have those that aim to make it simple for their customers and unburden them, while on the other side you have those that expose all the complexities and give intricate controls. The first side won't allow you to specify security requirements, while the second side will give you a hundred options (of course there's also processors positioning them in between). The two sides generally target different customers.
> The data they took with the attempt of purchase is the card is still usable (not cancelled)
The payment flows should not distinguish between a nonexistent card, a cancelled card, and a valid card that needs 3D Secure. I bet the banks could even implement that without any cooperation on the part of the merchants.
With a debit card you’re playing with your own money.
(I'm pathologically avoidant of credit cards, which I think are mostly pointless.)
Under the law, credit card issuers actually have more time to deliberate before making you whole, not less.
It is nice that you know what the law is but that isn't the same as the law being followed. Also the bank was PNC, not the biggest guy ever but not a small player either.
In a sense it is though, because it lowers your available credit by the amount of the charge. And the fraudsters are going to try to run you right up to your credit limit, so you end up at the same problem: You now have legitimate charges being declined because the fraudsters locked up your payment card.
No part of my life has been harder for not having revolving credit. I had a family, with two kids, starting in my very early 20s; I have lived on ramen wages several times since then; I've bought houses, rented cars, all that stuff. There's really been no point I can think of where I felt like having a revolving credit card would have made any of it more manageable.
I'd get points and stuff (I have a card now, it has a fuckload of points on it) but that's just an incentive to use the cards, not an intrinsic case for them.
I think most people would be much better off just using debit cards, and operating with the funds they actually have. And, again: it is in fact easy for me to say that today, but I believed the same thing when I was younger.
The crazy thing is coming to realize how little your credit score matters if you decide not to play this game. People say it will impact your ability to get a mortgage or a lease, but: not my experience!
Totally agree, but - and this is another example where the rich(er) benefit - if you actually have the money and good financial discipline you're better to put everything on your CC and pay it off in full monthly. Let the merchants finance for free for 3 weeks, plus maybe get perks like purchase protection and extended warranty.
Could be but in my personal experience, it has been the exact opposite. That said, I don't use banks. I work with credit unions exclusively. Maybe they have very different rules when it comes to handling debit card fraud.
The only time I have needed a debit card are when a place doesn't accept credit or charges a heavy markup for credit. Someone here mentioned Robinhood virtual credit card - I need to look into it, but I use a similar service and I keep my debit card locked only to unlock it for the exact window I am actually using it.
> rented cars, all that stuff. There's really been no point I can think of where I felt like having a revolving credit card would have made any of it more manageable.
I'm unaware when you last rented a car but when I rented a car last month, the company put a $500 hold on my credit card. That credit card hold went away after I returned the car in good condition a week later. I imagine, if I had used a debit card, that $500 hold would have made $500 disappear from my bank balance during that time. When my nephew rented a car, they put a $2000 hold on his credit card, I'm assuming because he's younger than 21. He certainly doesn't have $2000 to spare in his bank account.
The same credit card got me a free upgrade on the rental car, primary insurance protection during the rental period (I didn't have to buy the $40/day rental insurance) and got me 5% cashback on the full rental amount essentially undoing state taxes. The estimated cash value of these would have been ~$500 for the week. Using the debit card from my credit union would have got me exactly $0 (plus a reduced balance the whole time).
OTOH, a credit union shipped me a chipped debit card preactivated. The debit card shipped via regular USPS mail and was stolen along the way. I always keep $400 in my checking account, so the theif emptied my card at Target and 7/11. Within hours of receiving text about the charges, I called my credit union, informed them of the detail. They sent me a binder full of documents to sign. The whole time the money wasn't refunded. They took a month to review evidence and refunded me $50 (of the $400) and told me I would have to provide additional evidence that needed wet signatures, notarizied to receive the rest ($350). Every notarizied page in my jurisdiction costs $150.
> EFTA Reg E gives banks 10 days to make you whole
Interesting - any idea if this applies to credit unions too (because then you just got $350 back into my pocket!)
> I presumably still somehow owe them $40, and it wrecked my credit score.
> People say it will impact your ability to get a mortgage or a lease, but: not my experience!
Are these mortgages or a leases after you became wealthy or around the time when your credit score was wrecked? I imagine the effects of the Nordstroms credit card wore away 5-7 years (I don't recall exactly which) after the $40 was reported as late. So if more than 7 years passed between these two events, you might have a perfect FICO score now, even though you don't know it. I imagine you can just go to CreditKarma for free and use their free "dispute" charge option to permanently erase that Nordstrom black spot forever. I don't think anyone cares a multimillionaire had a forgotten $40 invoice when they were 19.
Also, for anyone above $1MM in liquid networth, most financial institutions treat the credit history as a signal and not the primary signal. I believe you have been above that by a healthy amount for a while now :)
PS: I am a HUGE fan of yours. I wrote all of the above expecting you absolutely wouldn't have a second to read a word but if you do, Thank You not only for reading (I hope atleast some of it helps you) but for your comments on HN from which I have learned a lot.
I think EFTA covers the mechanism of how debit cards work, not the institutions that issue them, but I'm not an expert. I would lean towards keeping an account for the card I use in normal transactions at one of the Big Four banks.
I can think of plenty of times where the upsides of having a credit card were realized though.
Again maybe I’m wrong but I don’t agree they are equivalent. It sure fucking feels that way, the money isn’t threatened from my account.
Plus - like it or not - our society builds your credit based on your use of a credit card. And if you pay your balance in full every month I'm not sure why anyone would prefer paying up front (debit) vs. free financing.
In practice credit cards just have way better fraud protections.
Credit card system was already around for decades before though
The signature scheme I implemented was thoroughly tested. Implemented from reading the Lamport and Merkel academic papers and under 1000 lines of code in total so pretty easy to audit... Nobody found an issue with it in 5 years. But the suppression was suspicious. The narrative of "Don't roll your own crypto" is suspicious... Is it really better to use the same library as hundreds of thousands of other projects? Is that really lower risk? Didn't we learn from the Axios hack that popularity doesn't provide security.