According to the Press Association, Citigroup has started sending replacement credit cards to its customers, apparently in response to a massive security breach at Heartland Payment Systems.

"Heartland Payment Systems revealed that its system used to process Visa, MasterCard, American Express and Discover Card transactions was breached late last year.  The Princeton, New Jersey, company said the breach did not involve  personal identification numbers (PINs)"

(Editor's Note:  Translation for They didn't get the PIN's.  What If banks and V/MC  had pushed the more secure "PIN Debit, instead of pushing the less secure "signature debit"?  Sure, their excessive profit's derived from higher interchange fees and the milking of $17 Billion dollars off consumers from overdraft charges was nice but now it's kinida biting them in the *ss.  I guess there is a price to pay when self-interests are given priority over what's best in the long run.  What's best in the long run is securing payments...so at the end of the day, this dilemma has been exacerbated by their own self-serving modus-operandi.

Earlier this week I posted that every $100 of PIN based transactions there was 1.09 cents of fraud.  Signature debit comes in at 5.4 cents.

It will be interesting to see how drastically those numbers shift after the final tally on how much this breach winds up costing. Don't expect anything too drastic however...it wouldn't be in V/MC's best interest if those numbers become any more disparate.

Prediction 1: The new signature debit fraud numbers WILL NOT include costs associated with replacing cards and monitoring accounts...only the actual amounts of fraud committed using the breached card numbers. They want to keep these numbers as low as possible.

Prediction 2:  The PIN debit fraud number's will always include every single penny derived from skimming, tampering, the use of camera's, people foolish enough to provide their PIN's to scam artists, and if they could, they'd include ATM Bombs.  V/MC will manipulate the data in order to skew these numbers to appear as high as possible, to keep people from questioning their mindset in pushing SigDebit over PINDebit.

Predilection 101: Visa and MasterCard will continue to push whatever makes them the most money.

Prediction 3:  Because of their aforementioned predilection, V/MC will be involved in yet another Antitrust lawsut, drag it on for as long as possible, and settle for about a third of what they wrongfully profited while they dragged it out over the years on the morning the case is scheduled to begin.  OR...they will see the light of day and determinie that their strategy won't hold up in the long term, and having learned from past mistakes, work with the other EFT networks (Visa owns Interlink/MC owns Maestro) and empower PIN Debit instead of fraudsters.  Flip a coin. 

So...how many cards will Citi have to replace?  Citibank has not revealed how many of its customers are involved however...Citi has more than 150 million credit card accounts worldwide.

Meanwhile...the growing number of banks across the US have that have said their customers were involved in the Heartland breach and have issued new cards to consumers has climbed to 440+. . The rest are still monitoring their systems for unusual activity to detect fraud.

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