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Last spring, I wrote a post about electronic pick-pocketing, a crime perpetrated by hackers using devices to read data from the contactless cards in consumers’ wallets. At the time, the only prevention method really discussed was a protective sleeve consumers could put around their contactless cards to stop the hackers from stealing their information simply by walking past.

The chatter seemed to dwindle with time. Then last month I came across an article posing questions about the necessity of the sleeves. As with many issues in financial services, there seems to be two very different schools of thought.

The first is to continue to push the sleeves as an effective, affordable fraud prevention method. The second is to leave the card sleeves behind and instead focus on more advance systems, such as free fraud prevention apps for smartphones. With mobile wallets predicted to rise in popularity this year, the second school seems to have the right idea.

Then again, there are plenty of RFID cards out there, and there will be more within the next 12 months. Leaving them vulnerable can’t be a smart idea either.

The entire conversation may all be moot, however. That’s because both solutions are asking the consumer to take action. And today’s consumer may not have the motivation to take extra steps to protect himself.

Card issuers generally reimburse their cardholders for fraud losses, and consumers are very aware of this practice. What’s more, the sleeve manufacturers do not guarantee against fraud losses (neither, I’m sure, do the fraud app developers). For mass adoption to occur, especially where protective sleeves are concerned, the product developers and their financial institution partners will need to do some pretty hefty consumer research to figure out not just how consumers will want to use these tools, but more importantly, why.
 

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See the original story in CUinsight