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tv   Key Capitol Hill Hearings  CSPAN  May 3, 2016 12:00pm-2:01pm EDT

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delegates. she has 520 superdelegates. bernie sanders is trying to those superdelegates to support him. we will have new delegate counts as part of our coverage tonight. we will also have candidate speeches and viewer reaction tonight. there are 57 republican and 92 democrat delegates. the polls close at 6:00 local time. >> madam secretary, we proudly give 72 of our delegate votes to the next president of the united states.
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you may have got the new credit card recently with a chip in it. consumer advocates from the credit card industry will discuss the implementation of that chip card technology. a group called protect my data is protecting -- hosting this of that. this is live coverage on a c-span. we expected to start in just a moment.
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good afternoon unwelcome. it --
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>> good afternoon and welcome. thank you for being here. thank you for taking part of this conversation today. we will follow up on the event we had last year. that me start again. anyone missed it, i want to welcome you today to take part in this great conversation we are having on the chip card transition six months later. lynn with attacked my data. thank you for being here. we had a great event last year that i hope some of you were able to make it too. we will have time to answer any questions you have. over six months since the october 1 liability shift deadline and we are here to explore the progress the industry has made to protect
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consumers by deploying and implementing chip enabled credit cards, also need is emd cards and terminals. some of you i'm sure have all received your chipped cards. we won't hold them up to avoid any security issues. the challenges and roadblocks that have delayed this progress, the difference between the , we will talk about an update on the white house's effort to protect americans from credit card fraud and identity theft. here is where we are. in the months leading up to the october 1 deadline, retailers across the country were responsible for upgrading their payment terminals to accept new chip enabled cards.
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on october 1, 2015, retailers and credit card issuers underwent a liability shift. now in the event of fraudulent activity, the financial burden falls on which ever party was using the old payment technology. new chip cards are considerably better than the old magnetic stripe cards from the enter thosead to longer than we should have, they rely on a signature as a secondary form of verification. that feature has little worth since signatures are often a board or easily forged. consumers are still vulnerable to comment forms of credit card fraud. chip enabled cards must be coupled with personal .dentification numbers or pins there is a two factor
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authentication system and that has been used around the world to effectively combat fraud for years. along with the chip, each card that must unique pin be entered when making a transaction. seal -- steal a card, it would be useless without knowing the pen. we could extend those protections even further if we had more robust mechanisms available to consumers to securely use pins during online transactions. the technology exists to securely use them online. it's just not widely used. and ace of benefits heightened security protections were highlighted in president that's executive order required technology for government issued credit cards
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and in a pride of the old terminals at federal buildings. others have recognized that security benefits of combining chip cards with pins. discover,t two weeks, one of the largest card brands, embraced the willingness to use pins. new york had a consumer alert stating in part that chip cards that require a personal identification number could be entered at a point-of-sale to make a purchase and they are the most secure. over the last year, the payment industry has rebutted arguments in favor of this by saying one day we will move beyond the pen. true, there will always be a better technology available down the road. sense to makee the american public stand by and wait for an alternative while they remain susceptible to fraud.
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traditional credit and debit cards account for the overwhelming majority of all transactions in the united states today. credit cards be the preferred method of payment for consumers for years to come. we must ensure we are using every credible means to safeguard those transactions now. chips and embracing pins. i would like to try over to camille fisher. she is the policy advisor with economic house council. she will speak about what the administration is doing to protect consumers. thank you. [applause] fisher: thank you. it's a pleasure to be here with you to talk about the security
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initiative. the hallmark is that every step theadministration took private sector ran with. the could not be here today without your commitment. i hope our course -- cooperation lives on. i think our initiative can teach the next guy a thing or two. we launched our cyber security plan. we needed to take a hard look at our infrastructure and update security. some of you continue to do that. we also announced new milestones. over 2.5 million chip cards for government accounts. we have deployed our entire fleet of treasury issued chip card readers. in this case, we needed to take the administrative security step
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that many of you have and are taking. it's a process. if we could cut through the red tape, it can be done. in addition to the milestone, there was a first time that we 'se the largest users of this more secure technology in the world. i got a lot of internal spec for saying that. no one would believe we are ahead of european countries who is. faster and earlier. i've been talking with industry and the numbers speak for themselves. if you look at fisa, they issued 18 million cards. now the have issued 265 million cards. mastercard and discover are much the same. american policy has a chance to be the strongest. we are the leaders in the security tech knowledge he because we work together. now is the time to make sure we have the will to use it.
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adopting and turning on the terminals has been a longer process. i've have been encouraged by the steps you have taken. target and home depot are right there with us. iny announced an upgrade 2014. three fourths of transactions occur in small merchants. we have been able to communicate the need. this effort has taught me that innovation and smart implementable steps are fundamental in securing the financial system by giving consumers the tools to make -- take care of their own security. in the final phase, we hope this forbecome a one-stop shop victims of identity theft to get the tools they need to protect themselves. able to fillbeen
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in gaps. program,he open access over 150 million consumers can now access their fica scores. other banks and networks have already done this. we realize that chip alone is not enough. a phasedd has revealed out rollout of biometric authentication. complaints some of had about the chip card experience, a faster way to authenticate transactions. engaged with our partners to launch cyber security campaigns. other users can take steps to secure their online accounts. we're focusing on multiple factors. each company has a role to play.
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remarksng, i hope my have taken the fear of it will lastd through the administration. debra: thank you. that was great. it's a little narrow back here. we are going to move to our three panelists that we have joining us. you have their bios in your packets so you can follow along. them, we have a the electronicom transaction association. liz garner from the
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merchant advisory group. steve who is the president of the american consumer institute center for citizen research. thank you for joining us. we look forward to your remarks as well as the discussion that will follow. let me start things off with scott talbott. let me ask you if you could tell us what the payment industry is doing to protect consumers and provide your thoughts on the transition that has happened so far? scott: thanks for having me. i represent the transaction association. we are a trade association that represents 500 companies that focus on the payment system. we ensure that payments are faster and more secure. everything we do is geared toward those goals to make sure
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the transaction go through. migration, this is a major change. it's a major upgrade in our system. we have gone from the magnetic stripe, that was used in cassette tapes and most of you don't know what they are. them in yourtick car and rewind with a pencil. it's the same tech knowledge he that was used in those cassette tapes. it's been used since the late 60's. this is a major change. when you look at the marketplace, we have 1.2 million cards in america that need to be upgraded. milliont about 9 merchants that need to be upgraded. number of banks and other players who are part of this process going through this migration.
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this is not a government mandate. this is not a regulation. this is something initiated by the industry to make transactions more secure. we are about seven months in. half of the cards in america now have chips. if there is anybody who does not have a card, i would be surprised. 70% of americans have a chip card. other ahead of every region in the world in terms of the number of cards that are in circulation at this point. we are halfway done with the cards and we expect the other have to be issued this year. , most ofd of this year the cards if not all of them will be upgraded. there were always the sum lagging. merchants have
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upgraded to chip. if you break those out, the large merchants are largely ready. the small merchants are about ready. we will talk about the middle group and little bit. merchants are well on their way to upgrading the chip. let's focus on what it does. we have $6 trillion in payments. there will be a lot of fraud and the chip is aimed at ending used ineit frauds stores. they create a counterfeit card and they walk into a store to make a purchase. the usually focus on electronics. they make a purchase with your account number on a fake card. chip card does is creates a computer chip in the card. it creates a one time code that travels along with your account number when the merchant sends the instructions to the bank
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that issued the card. that code it cannot be replicated i the thief. if they do not know that code, your account number is useless to them. that's we are talking about. it's expected to decline. in an onlineork scenario unless you have a chip reader at your house. i don't and i work for the industry. it does not work for lost or stolen cards. it hits the largest source of product, in-store purchases. we are about seven months in a we see some trends. those it moving from merchants that are ready to merchants that are not chip ready as you expect. we see it move from the in-store to online as we saw in europe and other countries. the process for a merchant to
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become chip ready is called the testing and certification phase. every merchant must go through this. we can talk about more details on how it works. ametimes it simple if you are one terminal merchant. you can use something like this which attaches to the cell phone. this makes this instantly ready to take chip cards. if you are a big-box retailer, they have spent many months getting ready for this transition. we see challenges are the midsized retailers. they have systems that are somewhat complex but not as complex as the big guys. in terms of the certification process, everything that is part of the transaction has to be certified. something and by
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this off-the-shelf, this has been pretty certified. case of a big-box retailer in your system has to be tested. those metal merchants are where we run into problems. many of them have add-on software packages that have to be tested. they use their terminals for , rewards, payroll programs. everything that stands between the merchant and the payment network has to be certified. why do we need to test this? anyone of those software programs can be used as an access point for thieves. everything that's part of the terminal has to be tested. some delays in the system getting those merchants with those add-ons tested and certified. i think those are the major
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pieces. i am happy to talk about other points. let me turn it back over to. debra: we will have time to get back to some of those points you made. the other panelists can talk about those as well. i want to turn to liz now and ask about what the retailers are doing to protect consumers and your thoughts about the transition. if you could talk about chip and pins. liz: thank you for having me here today. largestsent some of the merchants, including those that are heavily franchised. scott talk, ito reminded that 60% of the time we agree. especially about the rollout here in the u.s.. where we are going to vary a little bit is on not the details
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of the certification, that some of the terminology and we will get into that. our definition of a small margin and a large merchant might be different as far as who's been the most challenged with the process. i think it's important to note that global card fraud is some of the worst in the world. , we are aboutmer 50% of total global card front. .hat is abysmal we needed to make a change. this is one tool toward getting a more secure environment. it's not a silver bullet. it is a major change in upgrade we are going through. unfortunately, a byproduct of
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is being put to the side. it's being john conjunctival he with appointment. research beingof done at the merchant point-of-sale to make sure these transactions are protected better. this hasook at how gone, the biggest challenge for merchants is they installed hardware a year ago. they have not been able to get tested and certified. they are simply waiting. there are several small businesses who testified last october who said they were having challenges and they are still not certified. that's a huge problem when you look at the liability that went into effect. adequate roadmap to get them certified by that
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october 1 date. that creates a strain on u.s. commerce and consumers. scott's members have been very helpful to my members. they've been doing everything they can to help get our merchants tested and certified. it's not just their role. hardware providers, software providers, there are a ton of that's beenved and a real challenge there. it's a process. it's one we are making progress on. there are challenges there. i want to talk about how we brought this to the united states. there is an organization governed by visa and mastercard. technology that is the backend for these smart chips.
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one of our lessons learned early manage the process well. it's an indicator that we have huge concerns about them being involved in transitioning the u.s. to digital and mobile commerce in the future. that's one of the biggest lessons and takeaways for merchants who have had to rely on the companies for this major transition. some members of congress of started to look into this and how it's organized in governed. we need to ask why we don't have four pin here in the united states. there are branches of the federal reserve studying security who point to the standards which they directly and explicitly reference. securitysult in lesser as well as competitive
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disadvantages for other companies. we have seen that happen here in the u.s.. what does this mean? merchantseve that will get there eventually. the certification will happen. it's not happening in a timely fashion for a lot of people. i have merchants who have 800 locations in the u.s. who have not been able to get certified. set talking about a sub that's been able to fully deploy. we are going to disagree about small merchants. this is great for a food truck or small business. at a simplek independent operator grocery store, you can't have an out-of-the-box solution. you're still going to integrate your point-of-sale.
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this is not really realistic, even for a small independent operator. we talked a lot about what the liability shift means. i think it's important to know that merchants are covering a lot of the losses. that's something that could have been helped by putting pins on all of these products. we see a huge shift in sales to e-commerce transactions and mobile commerce. that's a good thing for the economy. those losses being born in that channel are by the merchant community. we have this counterfeit liability shift which ranks were covering most of the fraud before. now we see a lot of that transition to the merchant, which is creating strain on smaller businesses. businessesf my large with 800 stores are trying to see
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i think it is important to note that merchants are bullish because the charge process itself is a byproduct of signature card environment. the network rules are m managed by be sarah and visa andd -- by mastercard. it shows that charges are not accepted on pin transactions. when we look at it deeper, it is improved security. they noted last summer that when you look at the method equally pin-based products, they had the lowest fraud. that is a huge indicator that it is working internationally. there are several folks who agree, in addition to national banks and companies, the fbi and the new york department of consumer protection and they
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noted the added benefits of the security. another good example for the pin initiative in australia is where the customers and companies came together a couple of years ago to educate participants in the economy about the mandated pin on transactions at most merchants. the one exception being that quick service restaurants and other low risk, low dollar and small ticket type of merchants, where they basically said under $35, maybe you do not have to ask for a pin, but it makes sense from a policy perspective because all the banks issuing pins on them, if for some reason it is midnight at the drive-through and they want to ask for a pin, they can because it is on the product. in the u.s., if i have a customer and i say i do not like to lock my smartphone with a pin , i will not use my credit card
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because i got in trouble the last time i did that -- [laughter] at least hide it a little bit. willsay, i don't think i lock my pin, apple will come in and say, i will not enable for any customers who want to put a pin on this fund protected and that would be the same as what banks are doing by not putting pins on their products. i think it is a backstop for us toward innovation in the u.s. with one other quick piece that we have not talked about and i'm sure most of you may not have it on your debit.nless you pay emb withed challenges we have certifications, and we will get there, but there are challenges. scott is right. if a merchant wants to program their point-of-sale and process emb a certain way, they can do that. in order to be pin preferring, they now have to go through this
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added step, which they did not have to do before when you could wrap transactions in a striped -- and a magnetic stripe environment. prompt andnew screen i will put these outs of folks can take a look, but essentially, it says here [indiscernible] up as seeing this popped a certification process that merchants who rollout emb at the point of sales. it has caught a lot of folks off guard and it was slowing down time at the checkout only cannot figure out why. people realize the screens were inre and it is disingenuous the sense that this and companies who said they did not want to put pins and products in the united states are adding a layer of complication to emb, which is already complicated process for consumers. in this sense, where customers alect debit, that will route
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signature transaction, leaving small businesses more open to liability on chargebacks and the less secure transaction. we have sent major concerns with this. we think it is disingenuous at this point of sales when we are not doing the simplest things we can d to protect consumers. thank you very much. tonow, we're going to move [indiscernible] i went you to offer your input and thoughts from the consumer issues perspective. >> thank you. energy andhe commerce staff for securing this room. it is much appreciated. i am the president of the american consumer institute at 501 suite 3. look at a lot of issues from technology to insurance regulation, and it is good to be
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here today and talk about some financial and credit card issues, including the problem with fraud. very highp at a level, as we look at this, it is a bigger problem than all of this, but let me scroll down. we know that there are multipronged threats that affect americans, american businesses and consumers dealing from hackers and fraudsters that affects this is, government and consumer -- that affects business, government and consumer information. from nations, select government information, personal data on consumers and taxpayers, corporate espionage, the hackers received out of you in this and similar to this, what we are seeing is the value of financial information and that brings us down to it we are looking not -- what we are looking at, which is
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intermediaries and consumers are targeted week as of the big of the transactional information and what it has, including credit card bank information. financial fraud is a major problem. on the whole chain of everything i addressed, it is another example where we are not doing enough and we need to do more about -- as liz stated about the -- it card fraud issue needs to be fully addressed. 30 million american consumers were affected in 2014 by credit card fraud. if we look at the u.s. worldwide card volume, about 24%, more than twice as that is a share of credit card fraud in the u.s. the fact is the u.s. is this a portion in the affected when you look at other countries were over 10 years, 12 years in major had an where they have
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is option, so what i see sort of one of the simple steps to get it toward addressing this issue, and it is going to be continuous issue because hackers are this sort of stagnant group. they are very dynamic and they will figure out the next trick. if the trick is online or whatever, the thing we need to understand is that shape and pin -- chip and pin is a reasonable solution, can reduce the profits out there that people seem credit card fraud, simple, low-cost solution and an immediate solution in terms of pin.menting the chip and the federal reserve data, which is mentioned couple of times, there is one statistic that shows that the credit card transaction could be made 700% more secure, up to 700% more
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secure if a pin number had been included. we heard earlier that there is 2.5 million chip and pain in use in the federal government, so they have taken the step, and it is a step that i have not seen the private industry move toward. why don't we have chip and pin? why is it not in the u.s.? one of the simple answers is that consumers are not smart enough to remember a payment number, but -- remember a pin number, but when i turn on my cell phone, ipc, a lockbox, my garage door opener, i go to banks, thanks love paint numbers. if you -- love pin numbers. the first thing they do is push the keypad toward you to put in number. bottom line is atms require pins
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because banks are liable. a debit card, by the way -- [laughter] requires pins because banks are liable, but credit cards, they do not require pins. simply, the banks have shifted the liability, as mentioned, to merchants. had the liability stayed on the issue in banks, we would be using pins today. down to his banks are not liable, so shouldn't they be indifferent about all of this? why would they care? we are hearing arguments against pins. why?because there is money in it. they earn more on the chip and signature transaction fee then they do on the chip and pin
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transaction fee, so on the one liability should the to somewhere else. if it is fraud, they are protected than the other side because older technology benefits from the transaction. chip isom line is the better because of stopping counterfeiting, but the other does, if what the pin i drop of this, they could easily forge or scribble something. what the pin does is eliminate that, even online. a simple solution online is if you opt into it to get a text back and they send you an option and it gives you a pin number and you put that number online and it eliminates fraud in that manner. look, it is not the panacea. we know things are going to change down the road. there are mobile actions that may become dominant in five years or seven years. simple,w, we have a
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low-cost and immediate solution for credit card fraud, and that is my position and i am sticking with it. >> thanks. i think you made a good point about pins and the fact that we use a pin so often and every day. i just cannot imagine going to an atm and putting in our card and not entering the pin. that would be a total lack of security for all of us. i went to state clearly before i go into a couple of questions for our panelists to see if any of you want to respond to anything that has been said so far from the panelists? >> she is clearly looking at me, so i will take this. a couple of things. from my standpoint, eta is agnostic with respect to pin.
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we believe in chip and choice. citent them to be able to themselves, whether that be in, signature or nothing. morningide appear this did not ask for anything. it just took my card. reboot merchants should have that choice. a merchant, consumer or bank has the ability now to require a pin in their system. the networks can handle it, the banks can issue it and you will find 20 that have the pin. there are merchants that are moving toward a pin. the federal government asked for a pin. pin is great for getting cash back at the store. it is not so great that the toll booth or drive-through, so each merchant has a different profile and they have to decide if
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they want to require pin or not. if you sell high ticket items, pin, but want a it is up to the merchant and the technology largely exists for them to do that. pin also has challenges with implementations which is two thirds of merchants do not have the pin pad. if you would like them to do that, you have to purchase a pin pad. pin has strengths and weaknesses. there has been a lot of discussion about other technology out there. one of the challenges for pin is that it becomes a target for thieves. if a thief gets your pin, they can drain your bank account. we have seen atm fraud up in the last year in england and europe, where they use pin a lot, we have seen it increase and they can target your pin. sos are usually four digits,
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there are only so many combinations, i guess you could say 10,000 if you want to make 0000 into a pin. it is not hard to crack. what might make more sense, instead of a pin, a static number that never changes, our dynamic ones. other things available now, biometrics, thumbprints, that is a form of a pin. that is more secure than a static number. we are using selfies, voice recognition, i don't think we have ruled out retinal scans yet, but all of these technologies are getting better and better. when you talk about online transactions, there is another technology being deployed. it is a way to secure your transactions online as a way to help reduce online fraud, so there are pros and cons to pins.
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you need to weigh all the costs and factors for each merchant. choice, it should be up to the merchant to decide what to use. thank you. >> thank you. i see you are jumping in. >> i agree that it would be great for the merchant to decide. p and choice, as it has been coined in the u.s., is not that. to have a choice whether or not we have a pin has to be there. it is not there right now. we are deep talked about the added -- we already talked about the added security. whatever the device or medium iy be with some type of pin, think that is what scott and i can agree that pins may not be the say all and end all, but it
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is the best thing we have got there at market today. i think biometrics has its own challenges. a pin is more dynamic because you can change it. if somebody lifts right thumb print, which is a common thing to do, you can steal those easily, i am not going to cut my to protect my financial data, so there is real questions on how effective they are. i am not saying that they may not be the future rate they might in fact, but there is a lot to be determined there. andg back to the chip choice, i worked at the national restaurant association prior to that. talk about one of the most challenging environments. the last thing you want is somebody holding out this pin machine reaching out of your car window. maybe it does not work there, but let's go back to my example at midnight at the drive-through. if somebody is ordering $200 worth of gift cards at $100
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worth of hamburgers, i may be suspicious about the transaction. for me to have that choice, the project,o be on the which is not the roadmap we have chosen the u.s. i think it is important for e-commerce transactions, too. we had the last g-20 nation to emb. because we have done this so late, we had all the more opportunities to improve the experience with better technology. one of those being the ability to ask for pins in an e-commerce environment. i had a couple merchants role that outlasts year, and they are not seeing the benefit because some of the card networks and issuers have not agreed to support that technology for online e-commerce transactions, so i think we need to get better at that and moved to support those enhanced technologies when they are there. i want to make one more comment things? use your swipe this is unique. we talk about food trucks top of
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even thatbut independent grocery store operator, all of that hardware in the u.s. has pins on them but it is a matter of programming software. to find be hard-pressed anything outside of these examples that will not accept a pin going forward. >> steve? to sayi don't have much on this other than in terms of losing your pin number, it i lose my card, it is not inscribed on it. if i lose my card and my signature is on it, you have made. here is that these and it is much easier to look at my signature and force it then to find the card and somehow know my pin number. second point, it is easy to have a situation where may be three false pins leads to a lockout and notification to the customer, so that is a simple that 10,000 unique
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numbers somewhat hard to guess. the last thing, i am not sure , andomfortable i would be may be time of tell, but to share my biometrics up on a server somewhere where somebody can crack and get my information . i am not sure i'm comfortable doing that right now and may be biometrics is for the future, but i think the chip and pin is something to deal with now rather than trying to think ahead. i would much rather not have my biometric information sitting on the server when i do not have control over it. thank you. this has been a good discussion. i think we have great points out here. scott, you brought up some of the future that we can look toward for verification and i to take is interesting a look at what some of those opportunities might be, and i
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think it is looking at what is pins,ble now, which is and looking at what is available in the future, which may be excited for consumers for verification of protection. turn to you for a moment. you did bring up some of the challenges that have been faced with this certification process. i wanted to ask you if there have been any other challenges in the road, ones that have followed -- months that have followed october 1. if you wanted to highlight anything else? : in addition to what we said, we had inadequate timelines in the u.s. i understand that there is a real need to protect fraud, and we all talked about with the global numbers looked like and what the u.s. numbers look like compared to the global numbers, and it is quite a challenge on
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large businesses, midsize to small businesses, not talking about the food truck example, but some of the larger merchants in the u.s., and it has created a financial strain because there was not a roadmap to get it ready by that october 1 dates. we would love to further investigate what the impact has been on those businesses and certain losses have been filed in parts of the country already. it comes back to my key point. it has really shown that the emb companies have not been able to manage the transition in a manner that is adequate for all the payment stakeholders, and that is what we really get when you look at proprietary bodies a few andrds that has select companies in mind and we have to move away from that if we go to digital and mobile commerce and may be talking a little bit about these organizations later, but i will
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cause there for now. there for now. >> sorry. we have talked about this as an issue for the retailers for the credit card companies, but this is really a consumer issue. if you are thinking about this is a consumer issue, i know as the consumer, i have dealt with fraud with two reasons. one for reasons where my card has been compromised without chip will which the help, but i have either lost or had my card stolen, which the chip am not help, which the pin with help. i would like you all to think about how do we answered this for consumers? why don't we have a pin?
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why have we not moved to the pin with this opportunity to add to on how to this issue reduce this to step fraud situation? who would like to -- steve? steve: i will take part of that. what i was trying to say earlier is first off, there should not be an impediment for that. consumers are already using them for lockboxes, your tech devices and things such as that. they are using them on atm's, debits, so there is really no reason why we should not take the next step. of consumers have the ability to do this and there are simple tricks.
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it is taking a favorite number or something like my old home address or something. there are many ways of coming up with more than one number to be able to recall, so that is the simple issue, but i think the consumers are the not the obstacle but the players in the market are the obstacle. why the atm and the debit card, we do have this pin numbers, the question is who is liable for the loss? if the issuing bank is not liable for it, they're not going to require the pin, so in the case of the atm in the debit where there is liability, absolutely we see a pin, but when we talk about the issuing bank when it comes to credit cards, no, they do not want a pin. it is because they have shifted
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the liability to merchants, one, and secondly, because the chip and signature transaction fee is higher than the chip and can, so they make money by not moving to the newest technology. them he put on the consolidated -- the economist hat. we have these problems in economics and when you have an ,gent, so that the issuing bank is responsible for acting on behalf of everyone else in the environment, the credit card environment, but they are acting in ways that are unaligned with the principles, the merchants and consumers. that is what is going on here, and the solution to economics can go back to the old coast the arab. the solution -- coast their ory. if they became liable for this, the problem with that got annoyed 20 years ago, so to me, i think the industry needs to step up and make this correction for the benefit of consumers.
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llow for the ability for merchants to opt out, so if you into other issues for small retailers, i understand that, but the point is to say that simply consumers -- they do , and there is survey research that says they do not. consumers that actually use the pin for atms did not have problems using them with credit cards. it is one of those issues that i think what we need to do is move ahead, get that in place and let's reduce the fraud and clean this up and take profit out of fraud, and that in itself will be a big step in reducing this. everyone is chasing the value of the money. just as i said earlier, you have
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broken nations trying to take down the internet or control infrastructure with cyber security threats. it is the same kind of thing. we need to take the value out of that and this is a simple, effective and low-cost means of doing that, to require the pin. liz: i agree with most of what steve said and we have to think about how the chargeback process works, and that is one of the reasons this model has stayed in place. we are not talking about pushing up fraud up of consumers, but step responsible need to up, either play a bigger role in bearing the fraud toward they should not be managing this process. they put themselves in a role that has created distance in the marketplace to reduce fraud, so i think that is important. i think initiatives like the white house initiative is a great means to help educate consumers on the benefits of so major kudos to
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the white house forever thing they are doing to drive the market in the right direction. i think we need to educate consumers on the benefit. not just protecting the product like we do with the chip, but authenticating the cardholder, be if you pin, biometrics weor [indiscernible] i do think we need to speed up certification and that involves a lot of companies getting more involved in that. doing athat they are great job in helping merchants to get there, but we need the rest of the stakeholders to move us forward. as a consumer, i go into one of my local retailers, and even as a payment professional, i don't know where i am going to swipe my card these days because we did have this october 1 liability ship dates and consumers were led to believe that ship cards are going to be the end-all and say all as of october 1 and you could use them
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everywhere. we have got to get rid of this screen as the default process. this adds customer confusion and it does not make sense. slow up angenuous to already new learning process with screens that will benefit some companies and create added confusion for retailers and customers. >> thank you. be happy to continue on, but a couple thoughts. first, let's start off with the basic principle behind us consumers, we are talking about the liability ship. there is no change in the liability to consumers. the industry goes farther than federal law requires in terms of providing protection against fraud. federal law allows us to charge consumers for the first $50 of fraud, but read, the industry, have gone further than we need to there. we have a liability shift. it is a temporary measure that moves the liability to the
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party, the banker at the merchant, who was using the old technology. the liability has always had it. i think steve was talking about the liability on the banks and that would do something different, but they have always had that liability. once the merchant is upgraded to chip, that liability brings the chip back to the issuing bank, so this is simply a temporary shift to provide incentive in the marketplace for the merchant to do this upgrade to attack there are techniques that exist right now. identification, they will send me a text that says do you mean to buy that big tv? in addition to all the fraud techniques that exist, my bank can do that for me now.
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there are others we have talked about coming online. if a retailer wants to accept a , they can doin that today. there's another risk to the merchant -- if they are demanding a pin and a consumer walks and without a pin card, the transaction doesn't go through in the merchant loses a sale. there are risks in terms of using pins. whoever is using the techniques or technology that is the least will have the liability. pin, therchant wants a merchant has just increased their liability. transaction,on the the liability will be on the merchant demanding the pin.
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in terms of the screen that liz talked about here, under the durban rules, the merchant is given the choice to route the epic card transaction. -- debit card transaction. the merchant has to make a choice through which they want to route that transaction. choice,erchant makes a they will have to make the choice which network to route the transaction over. if the network doesn't make that upice, that will come because the network does not know where to route the transactions. that screen is designed as a default so that we know how to route the transaction. i'm sure liz has some comments, lawwe have to implement the
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. more point, just one on the timing. on the timing on the transition, the timing to chip cards was announced in 2011. during that time frame, there's a window to be getting ready and there are various benchmarks along the way. questions to ask, and this is a hypothetical, when did the merchant approach their process? on amerchants approached timely manner. some, like me, waited. until christmas eve to do my shopping. some merchants may have waited longer than necessary.
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i cannot speak for all merchants. of the challenges is because we have all of these different debit networks, we need to come up with a common language for all the cards to work on the networks. was we did challenge not have the law or regulations around senator durbin's language . three months later, that carmen -- that common language came out and was available. legalf the delay was the wranglings over the durban provision. had that not existed, there might be more time or other merchants might not have had to wait. i have a response from both liz and steve. let me get steve.
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>> a quick thought here. what is -- once the liability shift takes place than those costs are incurred by merchants, it is a misnomer to say that don't go tose costs consumers in the form of higher prices. they always do. it is an indirect cost, so the fact there was a liability shift absolutely puts consumers on the line. it's like saying shoplifting does not affect the cost of your goods. they do. that's all i wanted to suggest. could chime in on a couple of small things -- i think it is an important thing to clarify items on. scott mentioned thanks always have the liability. that is not the case. it's only for counterfeit fraud.
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if someone re-creates that counterfeit card and goes into the store and swipes it, we are perpetuating mag stripes on the back, but that's resulting in a lot of fraud shift for merchants to have not been able to get certified. now, even though it is shifting to merchants who have deployed.ble to get their armor chance who waited too late and there are merchants who did not wait too late. the transaction fraud monitoring peace is an interesting item and i think it is something folks in the room might want to look into.
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i don't have any concrete proof right now. we have just heard that anecdotally. so the text you get if you go over a certain purchase amount, that would be a great thing for folks to look into and what the impact have been. i think that pretty much covers everything. this is a really important piece. debit andn for routing is important. it helps create efficiency insecurity and in cost and for consumers. what the durban amendment did was said there had to be routing on transactions. it is important from a redundancy standpoint. if you did not have a second option to initiate a transaction, that becomes a real problem.
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redundancy is important here. thate all of the time redundancy is article in eating able to serve our customers that comment with an ebt card. what the durban amendment did is it injected competition and created redundancy for american businesses and consumers and that's a very good thing. imagine an emd world where the them wason to route visa, mastercard or one of the other networks. domesticantages u.s. networks competing for business and you are important and critical to the u.s. economy. screen is not something if the merchant is not doing smart routing. it pops up regardless. program theiran
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point-of-sale at a certain level but this is the default level. i have merchant to have deployed the screen and it has messed up there smart routing. this is a byproduct of what came out that here are the ways you can roll it out in the u.s. and some of the major networks involved in the certification process. this is unnecessarily creating confusion. domestic debitng cards on emd in the u.s., the biggest challenge was not the pending lawsuit. they did not want to open their technology. i used to do patent work but we are talking about 20-year-old technology. emd was rolled out in france in the early 90's. wereact that major brands
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not able to open up and get their networks on those ships, i amendment hasan -- absent that competition, we would be in a dangerous spot with the rollout in the u.s. and that's one reason we have major concerns inut playing any larger role commerce as we roll things out because of the lack of competition that could result. move to the to audience in one minute, but mentioned by we secure on the panel, it is a great program and we are so pleased the administration has been helpful in educating us about this issue. there waso see if anything you wanted to add before we moved to q and a?
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secure,we announced by our focus was on security and .hat would be the most secure the president was robust and it is ship and pin and we can be technology neutral and look for more innovation beyond pin itself. we are looking for a system that authenticates the chip presented at the terminal. i know many of the companies we have worked with and talk to have worked with these innovative models and are coming up with great technology. consumer cyber security campaign we have been working on, a lot of companies have come to the table and said this may not even multi factor identification, which is what we are focusing the campaign on.
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i know that they may have encryption and have different tools to help consumers online. househe white perspective, whatever you can bring for security, we want to see it. >> what i'm hearing you say is right now it is chip and then? >> i think the president said that. >> from the president, right now it is chip and pin. we are going to see what questions you might have for our panelists. if you could come we do not have a roving microphone. if you could identify yourself, speak as loudly as you can until we catch it on the cameras.
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>> if chip and pin, if the main problem it solves is lost and stolen cards, what percentage of those in the overall losses due to the fraud picture? >> if you look at fraud, about half is on the store. is going to be counterfeit card fraud. remaindertion of the -- >> i talked about the magstripe transactions. pin would help in that instance where someone has come in with a chip card and it is falling back to a magstripe card. >> is it useful to talk about how then could be used with online transactions?
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i think that's something we have not really delved into. might wantmeone who to talk about that? >> there is a commercially available solution that has been out there for some time. it's really out there to help serve the customer. i'm sure there are other solutions that have been deployed in india and the u.s. was looking at here for doing transactions online and how we might be able to move that forward. private businesses, airlines, department stores and others have deployed the technology and it allows you to prompt the customer for a pin if the card they are using has one and has been an able to buy the card issuer. sodoes coordinate mapping,
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you are never really gathering an online environment and it is a very secure solution. we are hoping for further adoption, especially for the retailers who have invested in trying to deploy that technology. >> i would just add that we are not against it, but thinking of another way to tackle it is a concept called tokenization. is taking the credit card account number and creating a token, a mathematical representation of the number to use a mobile phone. it is not actually your card. in an online setting, you can create a token assigned to you and whenever you make a purchase , it stores a representation of
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your credit card number and that helps reduce fraud from someone stealing it. the actual number versus the token that has been created in that scenario. ship and choice. deployed iny being many scenarios at this point. >> i agree and in addition, i think there's another option that pops up here and there. have an accountant you regularly use, you have a cell phone and they send you a specific 10 number that you put in, but all of these are good ideas to move forward with.
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would like to weigh in on that as well. we don't consider it new technology, but it is very good. i think i heard paypal at a white house cyber security event laugh at the concept that tokenization was new. but not all types of tokenization are created equal and that is something we should distinguish. will absolutely agree that this is a good customer facing experience. we have concerns as far as the backend security of this and that was developed by the people who brought emd to the u.s. and we have concerns their similar to the ones i have raised about a handful of companies managing a proprietary set of standards. we have concerns about the static nature of the token on the phone and additionally, it
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disrupts our fraud monitoring processes. there are concerns but i agree that it is the right way we should he headed. we have in-house tokenization and i have all of this data coming in. i want to encrypt that data and it's one of the biggest security projects being undertaken in the united states. least 50% of them were fully deployed. started the process and i think we will see that number grow. restaurants was on the hill in the last year and they said that was a top 40 for them. environments like restaurant and hospitality where you see a number of attacks, encryption can do a lot to protect that
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merchant from people infiltrating and getting access to their data. one other type is third-party tokenization rolled out by merchant acquirers. merchants are sophisticated enough. some are very new and so a lot of those numbers provide a great service in providing those encryption tools as an off-the-shelf solution. you operate in a present environment, you have to have your back office all match. if you employed some of these solutions for your online business, you have to wait until you are ready to roll out to make your front of the house
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matchup. up getting a hold some of these out to market as well, which is unfortunate. >> there is a theme here and do value payment card information, whether it is having a token, encrypting it, but that is in essence one of the goals in making the system safer, to devalue the information. if you can't get the information, you cannot use it. it's going to require multiple steps. it's all designed with one thing in mind. foot wall, the0 thieves will build an 11 foot ladder, so this will continue. there will be some new threat and if we are at conference next
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year, we will be talking about something different. deploy continue to resources and protect retailers. goal to make sure the transaction goes through and you can visit your favorite retailers or favorite parks and the transaction will go through. through andthey go making sure this panel is working toward achieving that goal. >> that sounds like the one minute closing remark, but before i do that, let's see if anyone has another question. bring up the microphone. is as you talk about technology and how it
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affects consumers versus scammers, i can see starting to steer from the .arger operations what is the cost association to upgrading those systems? >> i think the answer is it depends. if you are a food truck trying to up raid to a chip, it could he as little as $50. , the merchantex to upgrade the system in terms of the hardware, temporarily at least while the shift is going counterfeit is going on, currently if you are the party using the old technology, you will be currently liable for that loss.
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>> one thing that i think has in remarkable is the innovation coming in the last two years. there are increasingly new products that have complex depending on your -- what you're retailers can use. can have it on the terminal for a very low price. >> i would go everything that has in said. something like a server station at a small restaurant that's not a counter service restaurant, that's about
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$10,000 plus full integration. merchants upgrade their hardware because it's a big capital investment. in and some come environments have an attachment that is a chip reader. bringou have the time to someone in for emd acceptance and make sure it's all working together. but i think burden we are all trying to get the fraud out of the system and it's one good tool in the toolbox. >> we have time for one more quick question. i have one person in the back who has not asked a question. >> my name is william cunningham. about datalked
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protection in vulnerable communities -- immigrants, minorities and i'm specifically thinking about a case we were just made aware of of a woman somehowin a shelter and her ex or whatever used some locationy to get her and caused an issue at the shelter. i'm just throwing it out there. i don't know if you have talked about it. this is't know if isolated to a credit card issue, but it is really important. everyone in the environment, dealing with the collection of personal information, it is retention and use and letting consumers have the ability to opt out of its use. in some cases, don't realize you
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have your cell phone on and there's a code that has your location because you have a gps or restaurant finder and it has been's word -- it has been wased and one filer released on it. how do you know what person has the mac estuary probably the owner or summon close to someone could have known but otherwise, no one would identify my back number to me. it is really important in this whole scheme of things, but when it comes down to it, it is so important to make sure everyone in the environment has responsibility for storing and protecting and making sure these servers and things have firewalls and fires protection and other services to protect them, that consumers are aware of the protection life with the
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option of getting out. lot about talked a mobile commerce and there are studies that show a lot of consumers use smart phones as their primary means of accessing the internet. that opens up a whole new market of folks who may be paying with this device. as we go forward, one of the primary priorities is we are going to accept apple pay or samsung pay, it is very important we have a bilateral agreement with those companies we know how the data is being managed and use so that we can better protect our customers. >> we are going to run down if 45 secondgive us your
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closing. you've watched a good start, so you might get 30 seconds. so if you want to start. >> the privacy and security of consumer information has been of fundamental concern over this past eight years. are increasingly becoming digital and it is the first time we have had to confront these challenges. take a segment of the economy that needs some security tactical do smart and implementation of security.
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we hope as the hill and the next administration decides to can rent issues of vivus he and security that they use us as a model in the small places where they need steps, but also looking at the entire environment. that's something that still needs to be done. >> i hate to borrow the line that which unites us is greater than that which divides us. we've done many of these panels come as you have -- as you can probably tell. ofall share the common goals trying to ensure the safety of the system while still protecting consumers. are simultaneous gold we share toward making sure you get your boots. >> i'm not sure i can put it better than that.
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it's all about protecting consumers and protecting stakeholders involved in that process. one thing i will leave folks with is a take away as we move into the digital and mobile commerce space, we will get there. we need to think outside the box. let's not look at the traditional payment companies. we are talking about commerce. i don't say mobile payments, i say mobile commerce. payment is a piece, but there's so much added value we can bring as we move into those new platforms. technology is a great tool. what we are seeing coming online are a lot of options available
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for merchants and for banks to secure protections which will ultimately benefit consumers. herenk the technology is and i agree with what was said earlier about the latter getting higher all the time. nowddition, i don't right consumers are the impediment. i think they use pin today and i and viable a good option for protecting their information and from what i have the discovery card ceo has agreed penn is a good option and with that in mind, i will it is a saying i think simple, low-cost and immediate
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way to address credit card and that is chip and pin. andhank you all for coming thank you to our extraordinary panelists. this has been an extraordinary session and please take a chip and pin cookie and thank you again to everyone for being here. thank you. [applause] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]
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you can watch this program later today on our website. the austin american-statesman has this story -- the updated chip readers will reduce transaction time to less than two seconds. this is in response to the biggest complaint, namely that customers must wait until all of their items have been rung up until they can insert the chip card. with the up eight, the overall process and time will be much shorter and visa hopes by addressing this complaint, that
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or merchants will make the change to the chip readers. only 20% of retailers are currently using chip readers. you can read the rest of the story at the "austin american-statesman" website. road to the white house programming continuing today as hillary clinton is in a swing through kentucky and ohio. she will be in athens, ohio, giving a speech on jobs and the economy, which we bring to you live starting at 2:30 eastern time on c-span. senator bernie sanders campaigning today in kentucky. live coverage of his rally in louisville starts at 7:30 p.m. eastern. will have results as the indiana primary wraps up tonight on the c-span networks shortly after the polls close. we have this for you today -- house minority leader nancy pelosi is holding her fire on republicans when it comes to puerto rico. leader aimedc piercing criticism for in action on a host of issues.
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do your job, she implored. she adopted an entirely out of herone, going way to praise speaker paul ryan's efforts as genuine. as therico struggles u.s. territory defaulted on $422 million in debt repayment. attention turns to july 1 as the next potential deadline for action. thoses don't believe payments will be made. you can read more of that story on the hill.com. house speaker paul ryan argues millennials should support the republican agenda at the polls. he took questions at georgetown university. immigration reform and confederate flag displays were among the topics.
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>> please welcome to the stage the president of georgetown university. [applause] >> good afternoon and thank you so much for being here. -- theuld like to offer cnn can trigger sirs on our institute of politics and public
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service advisory board. we are honored by the presence of the 54th speaker of the house of representatives, a representative from wisconsin, the honorable paul ryan who joins us to offer his percent of to engage in dialogue. addressing a group of white house interns last month, speaker ryan spoke of the state of american politics. not as what they are today, but as what they can be. possibilitieshe of public service, work for and toward a more equitable and just society provides the context under which we gather today. this animates the work of our school and its efforts over the course of this past year to provide a forum for exchange in discussion and service of the common good. i wish to thank all of you for being here this afternoon and i
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a member of the student advisory board and director of our policy innovation lab to introduce speaker ryan. [applause] >> good afternoon and thank you so much for being here. i am a second-year graduate student here at the mccourt school of public policy. i am also a member of the student advisory board for the georgetown institute. i am so thankful to have the opportunity to be part of this great institute and its inaugural year. the best part of geopolitics is how to connect students across the entire georgetown campus to engage in thoughtful and open-minded dialogue about politics. these conversations have happened throughout the entire
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school year giving myself and countless other students the opportunity to learn from and engage with some of the most passionate and dedicated public service right here on the hilltop. this leads me to why i am here today, which is to introduce our honored guest, speaker ryan. paul ryan is a fifth-generation wisconsinite. he attended miami university in in 1998, speaker ryan won as first house election at the age of 28, becoming the youngest member of his freshman class. it became chairman of the house budget committee in 2011, where he developed his budget proposal, the path to prosperity. in 2012, he was the vice presidential nominee for the republican presidential ticket. in 2015, speaker ryan became chairman of the house means
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committee where he wants to renew trade promotion authority and report medicare. he was elected speaker of the united states house of representatives this past october. just last week, he made his late-night television debut on the late show with stephen colbert. please join our conversation today on social yet using the #ryanatgu. now without further ado, please join me in getting a warm welcome to speaker paul ryan. [applause] speaker ryan: thank you. hey everybody. good to see you again. thank you very much. kayla, thanks. thanks for the introduction.
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i really appreciate it. i want to thank my friend for inviting me here and all of you for indulging me. i like forward to answering your questions as long as we get it done within the scheduled time. [laughter] first i want to make my case. why support republicans? [laughter] [applause] ok. that was politeness. thank you. i am going to go out on a limb, and i am going to assume that has not been occurring to most of you recently, so here is how i would sum it up. the america you want is the america we want. open, diverse, dynamic. it is what i call a competent america where the condition of your birth does not determine the outcome appear like, where
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we tackle our problems together so all of us can thrive. how do we get there? how do we do that? that is why i am here today. building that america, that is why i got into politics. i never thought that i would ever run for office, especially when i was your age. back then, i wanted to be an economist, which goes to show just how much fun i was back in those days. my last year of college, i got offered a job on capitol hill. it is right interned. seniors you are learning this right now. the first time anybody offers you a job for anything, it is a huge relief and somewhat of a shock. i almost did not take it. what i wanted to do at that time, i wanted to go to colorado
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for a couple years. i wanted to wait tables and give mountain climbing in the summer and join this you patrol in the winter. that is what i thought i was going to do for a good number of years. when i mentioned this idea to my mom, she was not exactly enthusiastic. she said if you do that, you will become a ski bum. before you know it, you will be 30 years old. to which a 22-year-old me sounded really really ancient. i took the job quickly realized public service is where i could have the biggest impact. you can make a real difference in people's lives, and you can make a real difference in people's lives at a young age so when the congressman decided to leave the house, i've decided to run for his seat. to everyone's surprise, myself
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included, i won the election and i went into politics because i wanted to solve problems. i entered congress in 19 any nine. i don't even want to know how old you were at that time back then, but it was a different time. cell phones, they were a lot bigger. and so was my hair. the hotline issue at that time, and i remember it like it was yesterday, the hot button issue with social security. i wanted to get involved in this issue because i wanted to save it. for me it is personal. my dad died when i was 16 years old so my family survival those benefits. my mom used them to help start her new career. she had just turned 50. her husband died unexpectedly, and now she had to completely start over. every weekday, she would get on
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a bus and go 20 miles to go to school because she had to get a new skill set. a new degree. she was able to learn these new skills and start this business so i knew was social security had done for my family, and i wanted all americans of all generations to have the same level of security. this speaks to a larger point i want to make. when i was growing up, i lived in a country where if you got up every day and give it your all, it would a half. you would find a rewarding job. you could start your own business. you can buy a home and raise a family in a nice neighborhood, and no matter where you come from, no office or distinction was too high for you reach. anything was possible if you are willing to make the effort. if light through you a curveball, you would get the support you need it.
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-- needed. that i think is the kind of country we all want to live in. you know better than most that it just does not happen automatically. you grew up during the great recession. you saw yourself how opportunity can disappear in a moment. when i talk about holograms which these days, it is clear they are still living with the consequences of this crash. they studied hard but cannot find a job that matches their new skills. they are working hard but not getting that promotion they hoped for. they wanted to buy a house. they can't afford it. they want to begin to save retirement and they cannot sacrifice the money. the question is how do we open up opportunity for everybody in this country? and what specifically is the government's role in doing this. as you might have heard, this is a matter of dispute.
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and it has been for a long time. i just want to say one thing. my democratic friends are good people who love this country. let me say it again. the democrats that we battle with day-to-day and argue with time and again in congress and everywhere else, they are good people who love our country. [applause] we work together every day to find common ground and make progress where we can, but there are real disagreements between us, and we should be clear about those disagreements because when the time comes, people can decide which direction they want to go. this is what we feel we hope people and i believe many of our current policies are shutting young people out of our economy by taking decisions away from people, away from the individual.
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this is how we see the experience. we do not believe we should be governed by our betters. that they should be picking winners and losers. that is a recipe for a closed economy, for cronyism. we want an open economy where there is equal opportunity for all people, where more people can participate and rise on their own talents or where the individual can put their ideas and aspirations to the test. this contrasts, i know it is hard to visualize so here is an example. say you have an idea for a new business and you want to create a startup. you need to raise money to do that. if you want to raise money on the internet as so many people do these days, you typically have two options. ask for donations or get a loan. there is a third option. offers stock. that sounds pretty intimidating, but really it is not. it is basically crowdsourcing
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for investors, and it works for a lot of people because when you are not making money, you don't know your investors anything like debt. but a few years ago, the securities and exchange commission got involved. it thought this kind of crowd funding too risky for small dollar investors. that is people like yourselves just getting started. they said you cannot do it. instead of laying down rules to make it safe so people can actually participate, the sec ruled it out of bounds. that is the difference between getting information to people and making decisions for them. that is why we have a law to make the sec change course. we sent right the rules some of people can participate. don't outlaw this. it works. it is good. guess what happened. more people got to invest. more people reached their dreams. more startups got to expand. we have a bill on the floor this week to consider that we will be fixing this, but i would argue
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that this shows the kind of mindset that we need to have government. the point of having rules is to open up society, not shut it off. it is to give people the information they need so they can take action. it is that information that turns you into an investor or an inventor or an entrepreneur. that is how we solve problems in this country, from the bottom up, not from the top down. we need to take this mindset, and we need to apply this mindset to the challenges of the day. here's just a few more examples. i am all for helping people pay for health insurance. but the health care law literally outlawed millions of plans that were working that people like. now millions are struggling to pay for their premiums. if you are young and healthy, you don't need a plan with all the bells and whistles. you just the basic coverage. so why not open up at work
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health care system -- up our health care system so people can pick a plan that works for them? student debt is now bigger than credit card debt. so many of my friends on the other side say we should make community college free. what if you don't want to go to community college? why don't we break up the college cartel and say let's have students give them more options? why do we give our students a choice? -- why don't we give our students a choice? we have been fighting the war on poverty for years. we spend billions of dollars on 92 federal poverty fighting programs. yet, poverty is not all that much lower than when we started this war 51 years ago. if you look in our local communities, there are actually thousands of people fighting poverty on the front lines every day and winning this fight. so instead of trying to replace them, instead of trying to over regulate them, instead of trying
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to direct or control or displace them, government ought to support them. there are over 2 million people in our prisons. many of them are not hardened criminals. they are not violent people. a lot of them are people who made a mistake. i think we need to let more people earn a second chance in life. instead of locking people up, why not unlock their potential? you know the good news? good news is we don't just have to ask these questions. we can do these things. that is why right now republicans are working on a policy agenda to address some of these talent just i have just discussed here -- these challenges i have just discussed here. if we don't like where this country is going, and we do not, then we feel we have an obligation. we over the country and alternative. -- we owe the country on
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alternative. we owe it to you. we know you are the first generation that could be worse off than we have ever been before. that does not have to happen, and it will not have to happen if we seize this moment. maybe this will help sum things up. at the democratic national convention in 2012, they showed a video message government is the only thing we all belong to. i think they got it exactly backward. government is the only thing that belongs to all of us. it is not supposed to manage people but to serve them and i think this mindset is in total sink with the way you -- sync with the way you live your lives. your generation is the most technologically savvy. it i can get on youtube, it is a win.
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but you know that technology is not a toy or a distraction. it is what allows you to focus on the essentials in life. on your faith, your family, your work, your hobbies. i would argue that government is supposed to do the same thing. these days with technology, you are so used to customizing your everyday life. it is at your fingertips, so why on earth would you want to support a governing philosophy that seeks to take away your right and your ability to customize, to individualized, to decide critical aspect of your life like your health care or education? you cannot say government is of the people when it is imposing its decisions on the people. government does not impose community, people create it. government's role is to protect it.
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only we the people can build a confident america. so today, i am asking for your help. we need your ideas. we need you to create the next uber of lyft or twitter or snapchat or raise the next generation or run for office or get involved in our community or do all of these things because that is who we are, a country that sees the potential in every human being. you learned this in georgetown. i know it. and does everything we can to bring the potential to life. thank you very much. [applause] >> mr. speaker, welcome back to
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georgetown. get comfortable. we want to have a real conversation here today. as you know before i came here, i was with the democratic national committee. speaker ryan: i heard about that. [laughter] >> oftentimes we were talking about you but never thought about what we would do if we were sitting or face-to-face having a conversation. that conversation is so important. the students are ready for you. i have seen a few other questions, not all. they are ready to have a real dialogue. here is how it will work. we have the students up here who have submitted questions. we have some students who submitted questions via social media, and then we have students in the audience, many of whom want to ask questions. we will rotate through. for those of you in the audience, we will have a microphone stand in the center

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