Chip Card Consumer Information

Chip cards have been used around the world for many years as a deterrent to reduce counterfeit card fraud. Counterfeit cards are a huge problem in the US. Counterfeit card fraud is when a crook takes the information from the magnetic stripe on the back of a credit or debit card and copies it onto a counterfeit card. With this card, the crook can then ‘go shopping’ and commit fraud.

The magnetic stripe is fairly easy to read and the information on it can be stolen by swiping your card – this is called skimming. The thief can also obtain this information by hacking into an organization’s payment systems, e.g., data breaches at merchants or banks.  Once the thief has this information, it is relatively easy to produce a counterfeit card.

Unlike the magnetic stripe, the chip is extremely difficult to counterfeit. The use of a chip significantly lowers your risk of fraud as a consumer because a criminal will not be able to easily create a fraudulent copy of your payment card and use it to make purchases at a physical store. If chip cards had been rolled out prior to the major data breaches last year, there would have been significantly less fraud.

That said, there is no silver bullet for stopping fraud. While counterfeit fraud will decrease, thieves are already figuring out alternative ways to commit fraud in person and online. My prediction is the fraud will shift to other less secure channels (ecommerce, for example), but it will not go away. Fraudsters are incredibly adept at adapting their behaviours and tactics – and they will always seek the path of least resistance.

Finally, there is a lot of confusion in the press and at stores around chip cards and “contactless” payment cards and how they work. Chip cards cannot be read wirelessly. You do not need an RFID protected wallet for your chip card. The chip card must be dipped (put into the slot of the card reader) in order to be read.

Cards that allow for “contactless” payment are unusual in the US. The contactless device in a card is completely different and separate from the chip technology added to a card.  Contactless payments are payment transactions that require no physical connection between the consumer payment device and the physical POS terminal. Examples of this type of payment include fobs used at the gas station and payments frequently made on toll-roads.To find out if you have a contactless card that you might want to protect with an RFID shield, you can look on the back of your card and it will say if it supports contactless payments.

Chip Card Consumer Information was written by Julie Fergerson, Chairman, Identity Theft Resource Center and SVP, Industry Solutions, Ethoca.

About Ethoca: Ethoca is the leading, global provider of collaboration-based technology that enables card issuers, ecommerce merchants and online businesses to increase card acceptance, stop more fraud, recover lost revenue and eliminate chargebacks. Through the Ethoca Network – the first and only of its kind in the industry – we are closing the information gap between card issuers and merchants. This unique capability makes fraud intelligence and card acceptance insight available and actionable in real time. Our suite of services delivers significant revenue growth and cost saving opportunities to our card issuer and merchant customers around the world. Seven of the top ten ecommerce brands, seven of the top nine U.S. card issuers, two of the top five UK card issuers and more than 2,100 ecommerce businesses around the world rely on Ethoca solutions and the network that powers them. To find out more, please visit us online at www.ethoca.com.

About the Identity Theft Resource Center: Founded in 1999, the Identity Theft Resource Center® (ITRC) is a nationally recognized non-profit organization which provides victim assistance and consumer education through its toll-free call center, website, and highly visible social media efforts.

 

 

 

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