EMV Chip Cards: Limit Credit Card Theft

A Europay, MasterCard, and Visa^® (EMV) chip card is a payment card that is designed with a chip that protects your card and account information by dynamically authenticating card transactions. EMV chip cards have been adopted around Europe, Latin America, Asia, and Canada and are becoming more prevalent in the United States. That said, despite their increased popularity, many card holders do not understand the technology and are not reaping the benefits of the enhanced protection they offer.

EMV chips help reduce certain types of fraud and increase the security of your card information. The micro computer chip that protects your information appears on the front of the EMV chip card. The chip uses a one-time code each time you make a transaction. The process of substituting your valuable information with a code is called tokenization and makes it nearly impossible for fraudsters to steal your information when you shop at a traditional “brick and mortar” shop.

Traditional magnetic stripe (magstripe) cards are less secure than EMV cards because the data they store does not change. When data is static, it can be used over and over again to make purchases. In contrast, the EMV card transfers your data using that one-time code, called a dynamic card verification value (CVV), which makes sense to the card issuer but is gibberish to fraudsters.

 

How Fraudsters Pull Financial Information from Traditional Cards

Fraudsters use harmful software (malware) to gain access to the financial and personal data that is stored in the magnetic stripe on your card. When you swipe your card at a terminal, the malware pulls your card information, including your full credit card number, card expiration date, and the CVV. This data opens the doors wide for the fraudster to make purchases using your card information.

 

 

Credit card fraudsters become more and more sophisticated every day. As an example, there have been reports of fraudsters in a foreign country who used Bluetooth technology to retrieve data remotely from cards used in ATMs. The fraudsters recruited the services of the ATM installers and, in some cases, security personnel to assist them with the compromised machines.

 

How to Use an EMV Card Reader Correctly

In order for your card’s chip to secure the transaction, you must use the chip-enabled terminal correctly. Rather than swiping your card, you insert it, chip-first, into the slot in the terminal, leaving it there as you follow the prompts on the screen. It is important to wait for the machine to complete its work; it will tell you when the transaction is complete.

Some card readers appear to be chip-enabled, but are not activated to read EMV chip cards. Merchants were required to offer EMV chip terminals by October 2015, but some merchants have chosen not to use the technology. Those who have chosen not to take advantage of the technology assume the responsibility of costs related to fraud, so you are still protected. However, it is best for you to use the chip reader when possible. When you swipe your card, even at a chip-enabled reader, your sensitive information can be obtained if the card reader has been compromised.

Some EMV chip cards are also contactless, which means that you can simply tap your card on the contactless symbol on the terminal to begin your transaction. Contactless card reading is also referred to as “near field communication” and is both secure and very easy to use.

EMV chip technology is spreading throughout the United States in most retail environments. ATM machines and automated fuel dispensers (gas pumps) are a couple years behind; they are required to accommodate EMV chip technology by October 21, 2017.

 

The Limits of EMV Technology

Though EMV chip cards represent an important step toward protecting your money, it is important to understand their limits. They protect your financial information when you make transactions in a brick and mortar setting, like a grocery or clothing store, but they do not protect you online. In fact, it was found that in Europe EMV chip cards reduced fraud associated with brick and mortar transactions by about 75% between the years of 2004 and 2012. However, fraudsters switched to card-not-present fraud (online transactions), which increased by approximately the same percentage. When one door closes on fraudsters, they always find a new way to commit fraud. After all, that’s their job and they’re good at it.

My advice is to continue to be cautious about how you use your card online. Here are a few tips which will help protect you…

• When you are making online purchases, only enter your financial information on secure sites. You can tell a site is secure by the URL and the “padlock” symbol in the URL bar. Ifthe URL begins with “https” instead of “http” it means the site is secured using an SSL Certificate.
• Talk with your financial institution or card issuer about additional security layers that may be available for on your card.
• When you use your card at a public terminal, cover your hand to prevent people or cameras from viewing the numbers you press (believe it or not, this simple step can be very effective).

Always remember to check your bank and card balances regularly to catch any fraudulent activity before it escalates.