The fact is, recent studies have shown that a consumer falls victim to identity theft every two seconds, amounting to as many as 13 million Americans annually. This costs the U.S. economy at least $6 billion per year.
A significant number of these instances of ID theft are the result of credit fraud. The problem for many consumers is that many cards have inadequate security measures built in, and retailers are largely using outdated card readers that are highly vulnerable to threats. For instance, CBS News reports the story of Cassandra Tang, a New York City resident who discovered recently that someone had used her debit card to withdraw $200 from her account at an ATM.
The kicker? The card in question was still in her wallet at the time.
It is believed that thieves were able to access Tang’s card information through the use of “card skimming.” To commit this nefarious practice, thieves will create capture devices and affix them to ATMs and retail card readers. These devices will then relay information from each card that gets swiped.
Such a simple crime has serious implications. Fraud experts note that this information often ends up on the internet, where it can be matched up with other personal information, such as names, addresses and phone numbers.
Are retailers prepared to shift to chip and pin cards?
The good news is that there is a proven way to boost the security of credit cards: issuing cards with chip and pin technology. These cards, also known as EMV, contain a microchip, and are significantly harder to counterfeit. They’re already popular in Europe, and when the U.K. introduced these cards, counterfeiting fell by 32.5 percent between 2004 and 2011.
By this fall, card issuers are expected to have given out millions of cards with microchips to consumers. The bad news, as NBC News recently pointed out, is that many retailers are not prepared to take advantage of their security features. These cards will still contain magnetic strips to make them backward compatible with older readers, but unless banks push retailers hard, they have little reason to upgrade. One study shows that only 42 percent of small businesses in the U.S. have committed to upgrading.
That may change once they hear more customer input.
“Consumers actually expect merchants to upgrade and what consumers tell us is that they see a merchant that upgrades more positively because they see them as being willing to invest in their security,” Carolyn Balfany, senior vice president of product delivery, EMV, with MasterCard, told the news source.
But as long as this transition takes time, consumers will still be at a high risk for credit fraud every time they swipe a card. It is important for you to remain vigilant about your personal financial data so you can respond quickly if it is compromised. For the best protection, consider signing up for a credit monitoring services that can alert you to certain activity on your credit file that may be indicative of fraud.