Can Card-Protecting Sleeves Get a Second Wind?

As contactless card issuance grows, a provider of anti-fraud sleeves, which block the cards from being read, says demand for its product is resurging.

But the actual need such a security measure may be still be low in light of the security measures issuers already use.

The Institute for Consumer Financial Education, which is based in San Diego, claims it has received more calls about funds being stolen from contactless cards, so it has started again to promote its card sleeves to protect against such offenses, says Paul Richard, the company's president.

"We've gone from having maybe one call per week to a couple of calls per day," he says. The institute has no stats on actual contactless card fraud.

The laminated sleeve has a shielding substance called a substrate that prevents hackers from capturing card data using a Radio Frequency Identification scanner that can read contactless signals from several meters away. Once the crooks have the stolen payment information, they may be able to create counterfeit cards and drain accounts or tap lines of credit.

The institute was one of the first organizations to launch card sleeves in the 1990s, which it initially called them "the credit card condom." The earlier version of the sleeve protected the card's magnetic stripe from damage, says Richard.

The company sells the shielding sleeves, renamed because the racy condom name did not attract consumers, directly to consumers through its organization in packs of 10 for $10 plus shipping, he says. The institute does not guarantee against losses if fraud results from data being scanned from shielded cards.

The sleeves may be a crafty idea, but consumers and banks likely will not want or need such a device, one analyst says.

"Consumers are not worried enough, and they do not want to be bothered by security over convenience," Avivah Litan, security analyst at Gartner Group, says.

The only way consumers might comply is if the handset manufacturers adopted sleeves, she says.

"There are too many other fraud protections, including zero-liability [protections] from banks," Litan says. "Consumers don't need more than that."