NCJ Number
92401
Journal
Journal of Insurance Volume: 44 Dated: (January/February 1983) Pages: 33-38
Date Published
1983
Length
7 pages
Annotation
Financial interchanges through electronic funds transfer (EFT) promises to be more efficient and cost-effective than the use of cash and checks, and fears of increased vulnerability to crime appear unwarranted as various security measures have been adopted.
Abstract
Because many EFT technologies are fairly new, especially computerized EFT transactions, EFT privacy and security has become an important concern. A recent bank industry survey indicated that annual losses to participating banks averaged about $25,000 per institution, less than one-tenth of 1 percent of most banks' assets. One reason for the limited number of fraud incidents is the use of secret computer 'passwords' known only to authorized senders and receivers. In some cases, the data is encrypted (scrambled) by complex mathematical formulas before it is sent. The intended receiving party is the only other source of the code for unscrambling the message. Other systems provide cardholders with personal identification numbers that must be punched into the bank's machine to consummate a transaction. Loss or theft of the card is not sufficient to permit an unauthorized person to obtain the financial resources of the card owner. The insurance industry has also responded to the estimated growth in EFT use by offering a number of innovative coverages for loss and theft involving EFT. Photographic illustrations are provided.