Card fraud

In hundreds of cases, the prepaid card program run by the bank allegedly sent users’ funds to fraudsters who had stolen their data. The security lapse has now caught the attention of the Democratic senator.

The Texas bank, which partners with the U.S. Treasury to dispense federal benefits via prepaid cards, is alleged to have dropped the ball as hundreds of cardholders say their money was forwarded to fraudsters posing as them.

The provision would make it harder for criminals who use real Social Security numbers to create fake personas and then apply for credit.

The card activation process is relatively low-tech, but since its introduction nearly three decades ago it has been hugely effective in preventing credit cards from falling into the wrong hands. Among its pioneers was Ash Gupta, American Express’s president of global credit risk, who is retiring next month.

American Express is falling in line with Mastercard and Discover in eliminating the signature requirement for authorization on all card transactions at the point of sale, starting in April of 2018.