Why Credit Card Frauds Are on Rise?

EMV Chip and Pin USA Benefits and Risks

If your credit card is rejected and the payment is halted, even when you have a good credit score, then you should blame skimmers. In United States, every one out of four cards fall prey to skimmers, who steal your private financial account information and use it for their benefit. According to a website CreditCards.com, American Credit Cards holders are in constant danger of getting their credit information purloined. The problem is serious and increasing with each passing year. According to MasterCard, the credit swindle cost retailers more than $32 billion in 2014.

Skimmers or credit card sliders are attached to genuine point-of-sale machines by the fraudsters. The said machines may be ATMs, gas pump etc. In most of the cases, unmanned machines are one targeted. Once your information is copied by the skimmers from the electronic strip, which is present in the backside of card (debit or credit); it can be imprinted on a fresh, blank card. Such information can also be sold online.

U.S. alone contributes to 47% of point-of-sale credit card theft, however taking about worldwide rate; the country represents just 24% of credit card volume. Until date, every quarter of cardholders in America fall victim of such frauds, reports CreditCards.com. The reason for this high percentage is the prevalent use of old technology in the credit cards.

U.S. has shown less interest in implementing latest EMV technology over the existing magnetic strip; says Craig Shearman, who is Vice President at the National Retail Federation. He also compared the strip with an 8-track tape of 80s. He added that it is very simple to copy the magnetic strips and the blank magnetic strip cards can be legally purchased with ease. Hence, this old technology is itself an open initiation to the fraudsters to skim the credit card information. Lastly, Mr. Shearman said that a new and better technology, which goes by the name of EMV, has docked the American shores.

The Europay MasterCard Visa (EMV) card is integrated with a data chip, which is much more secure than a magnetic strip. At each purchase, the chip cards or EMV cards create a unique code, which is very thorny to skim. In addition, these new technology cards also emit a signal on every transaction, which signals legitimate use. Such kind of technology is not easy to replicate and hence chances of credit card frauds are much less.

October 2015 was the deadline for the retailers in U.S. by which they should have implemented the chip card technology. However, just one-third retailers upgraded their resources and facilities for the EMV cards; reports MasterCard. In addition, the company’s official cites that there have been about 40% declines in card fraud since the chip card mandates were rolled out.

Bank of America, Visa, and MasterCard are some of the foremost credit card issuers, who provide an additional secondary security measure, which decreases the chance of a fraud.

Contributor to this post are Bill Trueman and Kevin Smith, leading payments, risk and fraud experts and frequent commentators and writers on various issues involved; with vast experience of the banking, insurance, retailer and international payment schemes, and are recognised thought leaders at the forefront of many industry-wide and international debates.

Visit here for more information on EMV CHIP & PIN Card Security, Risk Review Strategy and Parameters.

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