[NEWS] Crypto- and AP-relevant wire clippings

[dlv@bwalk.dm.com (Dr.Dimitri Vulis KOTM)]

Washington Post: Wednesday, October 9, 1996

AT&T Adds On-Line Card Protection

By David S. Hilzenrath

When it comes to using credit cards on-line, many Internet businesses say their
biggest fear is fear itself.

Citing consumer concerns about the security of credit-card numbers as an
impediment to on-line commerce, two industry powerhouses have introduced
guarantees in an effort to overcome what they call unwarranted anxieties.

AT&T Corp. Tuesday said it would indemnify holders of its own credit card
against fraud when they use AT&T security software to shop at World Wide Web
sites that AT&T maintains for its business clients. That means AT&T would
assume responsibility for the customer's usual $50 deductible.

America Online Inc. said last month that it would assume responsibility for the
deductible when subscribers shop at on-line retailers that have been certified
as meeting its own customer-service standards. That would include about 50 of
the more than 250 merchants on-line with AOL, which only recently began the
evaluation process, said Michael Minigan, vice president of marketing for AOL's
interactive-marketing unit.

``We think that this is a way to jump-start the industry for both businesses
and consumers,'' said Kathleen Earley, vice president of AT&T's EasyCommerce
Services for businesses.

Through the power of the AT&T name and the security guarantee, ``we can help
customers overcome any concerns that they may have,'' Earley said.

AT&T introduced a different guarantee in March, promising that holders of its
Universal Card who also use AT&T as their on-ramp to the Internet would not be
held liable if their credit cards were compromised anywhere in cyberspace.

AT&T said it didn't think the guarantee would cost it much money because the
risk of a security breach is so small.

Many analysts and retailers agree that the burgeoning business of electronic
commerce is battling a perception problem. Concerns about hackers stealing
credit-card numbers on-line have spawned a new industry of companies dedicated
to making on-line transactions secure through the use of encryption.

``There's still a reluctance to use credit cards on-line,'' said David Simons,
managing director of Digital Video Investments, which studies the Internet for
institutional investors.

``It's irrational because there's probably a greater chance of theft or fraud
by giving your credit card out to an individual on an 800 number or ... the
old-fashioned way, over the counter.''

``This is strictly a perception issue,'' said Jeff Bezos, founder and chief
executive of Amazon.Com, an Internet-based bookstore that handles thousands of
sales a day.

``It's so much easier to go through a trash can or dumpster and get credit-card
numbers than it is to break the encryption schemes that are used on the
Internet.''

Still, Bezos said there is evidence that perceptions are changing. When
Amazon.Com opened for business 15 months ago, about half of its customers opted
to provide their credit-card numbers over the phone instead of over the
Internet. Now, 85 percent complete the transactions on-line, Bezos said.


AP Online: Tuesday, October 8, 1996

Bankers Shrug Off Cybertalk

BY E. SCOTT RECKARD

HONOLULU-- Go high-tech or wither, speakers as auspicious as Federal Reserve
Chairman Alan Greenspan told the 1,100-strong American Bankers Association
convention.

''If you don't, you're basically toast, and punishment is swift,'' agreed
convention speaker Don Tapscott, author of ''The Digital Economy.''

You might think conventioneers from the largest organization of U.S. banks
would all be rushing to be first in online banking, computerized marketing to
customers, and other services and automated processes.

You would be wrong, especially at smaller banks, where many seem content to
take a more relaxed approach.

Louis Prichard, president of Farmers National Bank of Danville, Ky., is
computer literate. He rose at 5 a.m. Hawaii time Monday to e-mail colleagues
and check the bank's latest financial picture via his laptop. Farmers has a

World Wide Web site with information about services and rates.

But home and online banking are still being studied by the four-branch, $190
million assets bank, and Prichard says that while Tapscott glossed over
computer security concerns, his customers worry about them.

He wants other banks to solve the start-up problems before he wades in. ''We're
like water skiers: We'll let someone else cut through the waves,'' he says.
''We'll ride along, not far behind.'' Far fewer than half the bank officials in
a huge ballroom at the Hilton Hawaiian Village here held their hands up when
Tapscott asked if they had tried the Internet. Some, like Harold R. Pehlke,
never use computers and are downright hostile to the idea.

Pehlke, 57, chief executive of Republic Bank of Chicago, sat through one of
many small-group sessions on new technology, then announced to the consultant
making the presentation: ''You have convinced me to retire in three years.''

''I wasn't sure I was going to do it, but after listening to you I am.''

Even featured speakers older ones, anyway shared similar views.

William Seidman, head of the Federal Deposit Insurance Corp. under presidents
Reagan and Ford, said he had listened to Tapscott's presentation, ''and my
immediate reaction was, 'Thank God I'm old.'''

On reflection, though, Seidman said he realized that most bank depositors were
probably in no particular rush for high-tech banking.

''Don't panic,'' he told the bankers. ''It'll take plenty of time before your
average customer gets there.''

That sounded good to Gib S. Nichols, a director of the Flathead Bank of
Bigfork, Mont.

''Our customers will let us know when it's time,'' he said.

Seidman, who ran the Resolution Trust Corp. when it began selling off the
wreckage of the 1980s savings and loan debacle, said the now flourishing bank
industry had better watch for risks as well as find new high-tech ways to
market services. Many banks ''are reaching for loans today,'' he said.

''When the going gets tough, the tough get out of the way and let someone else
do the dying,'' he said.

''We used to say as regulators, 'When the tide goes out you'll see who's
swimming without a bathing suit.' Those of you who feel the tide better look
down.''


News Release (NationsBank):Tuesday, October 8, 1996

NationsBank Official Partner of NCL's Internet Fraud Watch

NationsBank (NYSE: NB) is joining the National Consumers League's battle to
ensure the safety and security of online commerce. Through a $100,000 grant,
NationsBank is becoming the exclusive bank sponsor of NCL's Internet Fraud
Watch.

Internet Fraud Watch, launched in February by the League and operated from its
National Fraud Information Center, is a first-of-its-kind program for
monitoring, reporting and preventing fraud on the Internet. NCL shares Internet
Fraud Watch data with local, state, and federal agencies, including the Federal
Trade Commission and state attorneys general, as well as international law
enforcement groups.

"Internet Fraud Watch is a resource that consumers can use to get educated on
the Internet," said NCL President Linda F. Golodner. "Since our launch in
February, our Web site alone has received more than 300,000 visits from
consumers and averaged 25,000 hits a week. We have helped consumers as well as
law enforcement officials keep cyberfraud in check."

The NationsBank grant will significantly expand the Internet Fraud Watch
consumer education and protection programs, according to Golodner.

With plans to offer Web-banking in mid-1997 and more than 120,000 customers
already using its PC banking product, NationsBank ranks online security as a
top priority, according to NationsBank President Ken Lewis.

"NationsBank is happy to help NCL broaden its fraud education and prevention
efforts," said Lewis. "The Internet's growing popularity and potential for
commerce make it a vitally important avenue for American business. It's equally
important that consumers know the Internet is a safe and secure place to do
business."

The Federal Trade Commission rigorously monitors the Internet. The FTC recently
cracked down on a pyramid scheme it believed had bilked consumers of more than
$6 million. It also took action against several firms that marketed business
opportunities by using deceptive claims and false earnings reports.

"Consumers who suspect a scam on the Internet have critical information that
can be used by law enforcement agencies to track down and stop potential frauds
before more consumers are victimized," said Jodie Bernstein, director of the
FTC's Bureau of Consumer Protection. "The Internet Fraud Watch program gives
consumers an easy and cost-free way of providing this information, and it has
been a major help to the FTC in identifying particular scams in their infancy."

National Consumers League advisors field calls about alleged incidents of
online fraud, direct callers to local resources and report the information to
state and federal enforcement authorities. Enforcement agencies use the data to
help shut down cybercrimes and boiler rooms. Work-at-home schemes are among the
top-five scams currently operating online. (NCL Top Five Internet Scams will be
available on Wednesday, Oct. 9.)

Consumers can reach NCL's Internet Fraud Watch by phone through the National
Fraud Information Center at (800) 867-7060, or visit the home page at
http://www.fraud.org . They may also send e-mail messages to
nfic@internetmci.com.


Financial Times: Wednesday, October 9, 1996

Smartcard Trials Extended

The race to replace notes and coins with electronic cash hots up this month as
the Mondex consortium extends trials of its smartcards. The group, which
includes British Telecom, Midland Bank and NatWest Bank, is issuing students at
York and Exeter universities with the cards, which contain a microchip that can
be loaded with electronic money from automatic teller machines and home
telephones.

The cards are "swiped" through retailers' tills to deduct payment for
purchases. Users do not have to sign an authorisation slip as they do with
direct debit and credit cards. Electronic money saves banks and retailers the
considerable costs of handling physical cash. But so far consumers testing
Mondex smartcards in the UK have not received a share of this saving. Mondex is
well ahead of its main rival in the UK, VisaCash, whose backers include
Barclays and Lloyds Bank. It could be a year before VisaCash starts its own
trials; Mondex could be offering its cards to the public by then.
Jonathan Guthrie


AP Worldstream: Tuesday, October 8, 1996

Banker Sentenced to Death for Fraud

HANOI, Vietnam-- A Vietnamese private bank executive has been sentenced to
death after a court in southern Vietnam found him guilty of financial fraud and
stealing funds from accounts, state-run media reported Tuesday.

Nguyen Van Son, deputy general director of Gia Dinh Joint Stock Commercial
Bank, will face a firing squad for his crimes, said the Communist Party
newspaper Nhan Dan, or The People.

Ho Chi Minh City's People's Court convicted Son of fraud linked to the private
bank he and his wife, Thai Kim Lieng, established in 1992. The court said Son
stole about $4.5 million from the bank's accounts.

Unable to collect the necessary capital to qualify for a bank license, Son and
his wife forged several documents claiming they had about $800,000 worth of
funds from 17 shareholders, court records said.

When the State Bank of Vietnam granted the couple a banking license in 1992,
they began siphoning off money from newly opened savings and other accounts.

At the time, the bank had more than $6.5 million worth of accounts, the
newspaper said. The bank also had collected substantial gold reserves.

Son continued to forge credit documents over several years to increase the
bank's financial standing, the report said.

A police investigation in 1994 led to the arrests of Son, his wife and five
other bank associates.

Lieng and bank director Nguyen Le Tue also stood trial with Son. Both were
sentenced to life in prison.

Four other bank executives were sent to prison for terms ranging from 3 to 20
years. Although a number of banking scandals have been reported in Vietnam
since Hanoi began shifting toward a market economy. This latest case is the
largest of its kind and marks the first time a bank executive has been
sentenced to death for his crimes.

Nhan Dan described Son's crimes as ''organized acts that cause extremely
serious consequences and pose dangers to society.''

In addition to the death and prison sentences, the court ruled that the
culprits must repay money taken from the bank.

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<a href="mailto:dlv@bwalk.dm.com">Dr.Dimitri Vulis KOTM</a>
Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps