Fiserv, FiCare clash over passcodes in card-freeze fight

A legal battle between payment processor Fiserv and FiCare Federal Credit Union highlights a major security risk for any business that accepts card payments. The dispute centers on how fraud holds are lifted. FiCare argues that Fiserv’s automated systems allowed unauthorized users to bypass security freezes, leading to significant losses. Fiserv counters that the credit union failed to implement available two-factor authentication tools, specifically one-time passcodes (OTP), which would have prevented the breaches. For retailers and operators, this is a warning about the 'hidden' settings in your payment processing stack. If you rely on a third-party processor to manage fraud, you cannot assume their default settings provide maximum protection. The case suggests that as fraud techniques become more automated, simple manual checks or older verification methods are no longer sufficient. If your financing partners or payment processors offer advanced security layers like OTP or multi-factor authentication, failing to use them could leave you legally and financially liable if a breach occurs. You should review your merchant agreement to see where your responsibility for fraud prevention begins and where the processor's ends.

Source: American Banker — Top News

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