I admit, that headline is misleading. The credit card companies, namely, Visa, MasterCard, American Express and Discover do not need to take an online stop theft class. They do, however, need to continue to improve their security to keep cotton-picking thieves from obtaining your information.

Last week, more than 100 people were charged in a massive identity fraud operation. The blame does not go just for thieves, but authorities also blamed the credit card companies.

District attorney (Queens, NY), Richard A. Brown, accused credit card companies of “putting too much money into marketing and not enough into security” and claimed they “would rather take the losses” than invest in proven security measures.

Deputy Inspector Gregory T. Antonsen, the commander of the New York Police Department’s Identity Theft Squad, told reporters the bust showed the need for computer chips implanted in credit cards to deter fraud.

Smart Cards

Experts say the United States is far behind Europe in adopting smart cards, which require cardholders to enter a personal identification number on a keypad, similar to a debit card transaction.

Smart cards deter fraud because they contain computer chips that encrypt transaction information and require thieves to not only steal card data but also know the cardholder’s PIN, experts say. The card's computer chip also has the potential to generate one-time-only passwords for more secure online commerce.

While European banks have issued millions of smart cards to consumers, U.S. banks still rely largely on credit cards with magnetic stripes, which are more vulnerable to thieves.

That partly explains why fraud in the United States accounted for a growing proportion of global fraud losses last year. The U.S. loses 9 cents to fraud for every $100 worth of credit and debit card transactions, while the global average is 4.5 cents, according to Robertson.

U.S. banks have been reluctant to issue smart cards because it would require retailers to make expensive upgrades to their payment systems, which they have been reluctant to do, said John Hall, a spokesman for the American Bankers Association.

But that may start to change as credit card companies try to compel retailers to accept the new technology. In August, Visa announced that retailers who do not support smart cards by 2015 would be liable for fraudulent transactions. Meanwhile, MasterCard has said ATM owners must accept smart cards by 2013 or they will be liable for fraud stemming from their machines.

For retailers, smart cards are one of several new forms of payment that require expensive upgrades to their terminals, including payment systems that allow consumers to wave their mobile phones over a card reader.

The cost of transitioning about 15 million retail terminals to accept chip-based cards is between $12 billion and $15 billion, Robertson said. Retailers believe banks should help fund the conversion.

With the global economy moving closer to digital currency and with credit card payments the most common type of transaction in the Western World today, security is a serious concern. Obviously, US credit card companies must adapt to the smart technology. There is no reason why our banks should suffer twice the losses to thieves.