When banks and credit card companies began mailing out replacement cards to customers with EMV chips embedded in them, the purpose was to increase payment security and make credit card fraud less prevalent. But is this strategy working as intended?
Not according to the recent lawsuit that Home Depot filed against MasterCard and Visa. The home improvement giant is accusing both card issuers of introducing their new security systems in an ineffective manner, according to Consumer Reports. Specifically, Home Depot noted that customers who use these cards are still only asked to sign their name, rather than input a PIN. This is generally considered to be less secure, as it is easier for a thief to forge a signature than to steal a PIN.
“Visa and MasterCard have pushed consumers to use payment card technology that Visa and MasterCard know is defective and subject to fraud and have colluded with each other and with the banks that issue debit and credit cards to do so,” read the lawsuit as reported by Consumer Reports.
Home Depot further alleges that the major card issuers are deliberately avoiding the use of PINs so as not to face the higher cost of adoption, while also forcing retailers to pay larger fees for each transaction, the source noted.
Transition to EMV Cards is fraught with difficulty
Despite the promise of better card security, when one zooms out from this lawsuit and looks at the bigger picture, it is clear that the switch to chip-and-signature cards has had its rough patches, and consumers should still be concerned about their security. While in many ways a card equipped with an EMV chip should be a better option than older cards, they are not foolproof. If your card is stolen, there isn’t much stopping a thief from using it.
Even worse, those who still have not made the switch may very well face even greater difficulties. According to a report by Bloomberg News, there is some evidence to suggest that thieves are trying to use all of the card data they have already stolen in recent years before this becomes more difficult. Julie Conroy, an analyst at the financial industry researcher Aite Group, told the news source that this has been a “fire sale” of existing card data.
Retailers that have not yet transitioned to the new system are beginning to notice more fraud chargebacks.
“We certainly got a good look at what the realities are,” Carman Wenkoff, chief information and digital officer at Subway Restaurants, told Bloomberg. Subway will reportedly finish the transition in its U.S. stores by the end of June. “It’s been significant. It does not make sense to wait to install. Every merchant should be thinking about how they should deploy EMV as soon as they can.”
The fact is that EMV chip-and-signature cards are a much-needed, but still imperfect, solution to America’s credit card fraud problem.
Like most shoppers, you’ve probably used your new cards in retailers that are equipped with the latest chip readers, and those that aren’t. You may have had your older card information compromised in the past. No matter what, now is the time to be proactive about protecting your identity from potential credit card thieves.
An identity theft protection service like Identity Guard can help by monitoring your credit files, Social Security Number and public records. Our service will alert you to certain activity that could be indicative of fraud, allowing you to take action.