New Chip Cards: What Do They Mean for Security Breaches?

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EMV chip technology is changing the way the United States handles credit transactions. As an upgrade to standard magnetic stripe cards, embedded chips don’t store unchanging consumer information. Rather, they create individual transaction codes that may only be used for one purchase, making it harder for thieves to access your information. EMV, which stands for Europay, MasterCard and Visa, has been a staple in the European marketplace for more than a decade, and America is following suit, hoping to lessen the billions lost to credit card fraud every year. According to consumers, the change couldn’t have come at a better time. As the holiday shopping season approaches, Americans are becoming more cautious when it comes to credit card usage. In a survey conducted last year, 41% of Americans who have a credit card say their card(s) have been compromised in some way. Although EMV technology is a step in the right direction don’t get complacent; its safeguards aren’t foolproof. EMV chips still won’t protect you from:

  • Pickpocketing. A stolen card is still valuable to a criminal, especially if you don’t realize it’s missing. Keep your assets in a safe physical place to avoid lost funds and identity theft.
  • Online hacking. Your EMV chip provides no protection against online hacking. Of those surveyed, 16 percent suffered from online theft during the holiday shopping season last year. Safeguard your purchases by only shopping at familiar and secure sites. You’ll know a retailer is using an SSL-encrypted server if “https” appears at the beginning of their URL.
  • Contact theft. In an ironic twist, credit cards with EMV chips must be inserted into a card reader in order to work. Although their aim is to minimize fraud, a physical transaction is necessary to utilize the chip’s technology. Add a layer of protection by using PayPal or smartphone apps like Android Pay or Apple Pay.
  • Non-EMV retailers. Federal law shifts fraud liability to retailers who do not use EMV card readers. As a result, most have upgraded their systems to eliminate the standard swipe. That said, there are no guarantees. For example, gas stations aren’t required to upgrade their pay-at-the-pump readers until 2017. Ask about EMV options at the checkout counter. Chip protection isn’t possible without new readers.

The bottom line: EMV chip technology is valuable, but it isn’t perfect. Avoid credit card fraud by keeping close tabs on your bank statements and checking your credit report on a regular basis. Don’t allow theft to slip past you. And if you are a victim of identity theft, and your credit has been affected by this, contact Lexington Law Firm for a free consultation and information about how our services can help you.