Credit card fraud has been one of the most common types of fraud for quite
some time. In fact, the Federal Reserve reports that in 2012, over 13.7
fraudulent credit card transactions totaled more than $2.3 billion in
charges. Research states that the magnetic strips located on the back
of these cards are easy to counterfeit. These strips have become one of
the main ways fraudsters make illegal transactions. To help, new standards
will go into effect in hopes of reducing the amount of fraudulent credit
Security chips will become the new standard of credit and debit cards.
While the law will not mandate security-chipped cards, the chips will
become a representation of the new agreement formed between credit / debit
card companies, card issuers, and retailers everywhere. This reformation
will leave issuers and retailers who choose not to adopt the new chipped
cards responsible for fraud liability.
Many retailers already possess the necessary credit card machines to read
chipped cards. For those who have not yet seen one, the chip card readers
will be located on the front portion of the PIN pads. The transaction
must be verified by PIN number or signature depending on the retailer.
Research shows fraudulent transactions are less likely to occur when a
person is asked to verify a transaction using a PIN. This is because many
retailers do not verify consumers’ signatures.
The new requirement will not go into full effect until 2017. Of course,
any amount of reduction in credit card fraud will be beneficial to all.
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