New Credit Card Tech More Secure, but Shoppers Should Remain Vigilant
As credit card companies roll out new credit and debit cards with EMV chip technology, it's important to remember that the cards are not fraud-proof.
While the new chip cards offer more security than the old magnetic strips, they are still susceptible to being stolen and used for fraudulent purposes.
Unlike older cards, chips protect personal information by creating a unique security code for each transaction. The magnetic strips generate the same information every time it's used, making it easier for the information to be stolen when it's swiped through rigged payment terminals.
But, unlike the chip-and-PIN cards used in Europe, the new cards don't necessarily require a personal identification number, relying on the not-so-secure signature, so if your card is stolen, it could still be used to make fraudulent transactions in person. Even if your card provider offers a PIN, the card will continue to work the same way over the phone and online so fraudulent purchases can still be made in those ways.
Since it may take a while before the majority of retailers have switched, the cards will still have a magnetic strip. Be aware that if you swipe your card with the strip, regardless if it has a chip, you won't get the chip's security protections.
According to Huffington Post, at the October deadline, only about 30 percent of retailers had made the transition to the new terminals. At $600 a pop, some smaller retailers have decided to wait. It could take until 2017 to hit 90 percent compliance. Retailers who don't install the new systems, however, will bear the responsibility for fraudulent transactions.
There has been some chatter among consumers and retailers that the new systems are slowing down checkouts, but the cards are still generally safer than paying with cash or check because you can dispute the charge if needed.
From the North Carolina Attorney General's Office, tips for consumers using EMV chip credit or debit cards:
- Keep your card safe. Store your credit and debit cards in a secure location when you're not using them. Know where your card is at all times.
- Destroy unused cards. If your bank or credit card company sends you a new EMV chip credit card, shred your old one and dispose of the pieces.
- Guard your PIN. If your card gives you the option of using it with a Personal Identification Number, make sure you memorize your PIN and keep it secret. Don't use familiar numbers like phone, address, birthday or Social Security numbers as your PIN.
- Be cautious when shopping online. The process of paying online is the same regardless of whether or not your card contains an EMV chip. Continue to follow our tips for safe online shopping.
- Check your credit report regularly. Monitor your credit to spot irregular activity. Under federal law, every consumer is entitled to one free credit report per year from each of the three major credit bureaus.
- Report suspicious activity immediately. If you notice an unfamiliar charge or payment on your credit or debit card accounts, report it to the bank that issued the card right away. If you spot an unfamiliar loan or line of credit on your credit report, you could be a victim of identity theft and need to act quickly to close the affected account, file a police report, and report it to the credit bureaus.