U.S credit card fraud is on the rise. A NASDAQ study showed incidents tripled from 2013 to 2014. Many experts believe the United States is particularly vulnerable due to the late and partial adoption of EMV standards technology, also known as chip-and-PIN technology. To make things worse, the new credit card chip technology (without PINs at this point) have been slow to catch on.
A faster migration to chip cards will undoubtedly slow certain types of credit card fraud, but other types are on the rise. NASDAQ estimates that card-not-present fraud will double to $7 billion, application fraud will exceed $1 billion and account takeovers will reach $2 billion in the U.S., all within the next four years. A study by Aite Group found that in the UK, which adopted chip-and-PIN technology over 10 years ago, credit card fraud of all types, as a percentage of overall transactions, has been cut in half in that timeframe. The driving factor was the adoption of the full EMV chip-and-PIN technology. The study went on to validate earlier estimates that card-not-present fraud is rapidly increasing.
While chip-and-pin technology has been successful in other parts of the world, the U.S. has been slow to adopt it. A recent Capitol Hill briefing indicated that, since the chip cards were widely introduced in October 2015, only 35 percent of stores have upgraded their payment terminals to accept them.
Since these cards are touted to reduce credit card fraud, make it harder to steal credit card information and help stop identity theft, why are U.S. stores responding so slowly? It could be that some consumer watchdogs are questioning whether the new credit cards are really as secure as they could be—or whether they’re just a hassle at the checkout line.
Debra Berlyn with Consumer Policy Solutions said that adding a personal identification number (the “PIN” part of “chip-and-PIN”), as Europe has, would better secure Americans’ information. Berlyn stated that the chip-and-PIN combo provides a two-factor authorization system and is a primary contributor in effectively combating credit card fraud in other parts of the world. At this time in the U.S., a signature is all that is required and has little worth, according to Berlyn. She says that signatures are ignored and easily forged; as such, U.S. consumers are still vulnerable to common forms of credit card fraud. Others argue that we need be in no rush to adopt PINs and that thieves will likely target these numbers as soon as they become available. Once successful, thieves can use this information to drain your bank account. So there is no easy answer here.
Card payment industry experts say that faster checkouts are on the way. Visa is rolling out upgrades to speed up the process, saving consumers up to 11 seconds at the counter. It doesn’t sound like a lot on an individual level, but, when added up, would save consumers millions of hours annually.
Advancing technologies regarding faster methods of payment are also in the works. Consumer groups say that the future may bring payment technology that is not only faster but more secure via a thumbprint scan, an eye scan, or even a selfie. Until then, we all have to be alert and follow a few simple steps to protect ourselves suggested by the experts:
1. Keep your cards in a secure place at all times.
2. Make a list (paper, not electronically) of all your credit card numbers and their contact numbers so you can quickly report suspicious activity.
3. Do not give your credit card information to anyone over the phone unless you initiate the call.
4. If a bank or financial company contacts you to say there is trouble with your account, do not talk to them right away or rely on any link or phone number in an email. Independently look up that bank or company’s contact information and use that information to contact them yourself in order to verify the validity of the original call or email. Chances are the original contact is a scam.
5. During a transaction, try not to let your card out of your sight. This is tough in a restaurant.
6. Check your bills for potential fraudulent activity as soon as they are available.