Fraud Woes Prompt Bank to Forgo Signature Debit Revenue
The American Banker reports that Bonneville Bancorp is taking an unusually drastic — and seemingly counterintuitive — approach to fighting fraud. To make sure its customers use their PIN codes, shoring up security for debit purchases, it is prohibiting signature debit payments in some states. Though PIN codes provide an additional layer of security, signature debit transactions generally earn issuers more money, and observers say it is unheard of for a bank to consider its fraud losses severe enough to switch off that revenue stream. According to a notice on Bonneville’s website warning of “high amounts of fraudulent card activity in California, Florida and Georgia,” customers in those states must use their PIN codes for any debit transactions. “No signature transactions will be allowed,” the notice asserts.
