Credit card safety in age of chip technology

- Chip technology in credit cards does not reduce the need for consumers to keep a watchful eye on their bank data. Mary Murray of Amegy Bank explains what consumers need to know to keep their information safe.

Even with a chip, a card can still be used if physically stolen. Fort Bend County law enforcement issued a reward for information that would help identify a man who stole a credit card and used it at a Walgreens and McDonald's. Police suggested in a Facebook post that if the clerks had asked for identification, the theft may have been detected, but Murray says nothing requires vendors to confirm the signature or a cardholder's identification.

"[Minimums for a signature] is going to be company policy," explained Murray. "It's not uniform. It could be $500 it could be $100, depending on the merchant, where they're asking them to check ID."

Not having identification does not mean a thief will be thwarted. In VISA's service rules for 2016, it states that if, "the Cardholder does not have, or is unwilling to present Cardholder identification, the Merchant must honor the Card." Most credit card policies loosely advise merchants to confirm the cardholders' identity but do not make identity verification a requirement.

Starting in October 2015, any merchant who does not accept chipped credit cards is now responsible for fraudulent charges made at their stores. Despite this liability risk, not all merchants have adopted the policy.

"Many retailers don't accept a card with the chip technology -- they have not upgraded their equipment," said Murray, who believes a number of vendors are willing to take on the risk rather than pay for the software update.

This means cards still have the black magnetic strip on the back, leaving bank information as vulnerable as ever.

"If you hand it to someone, and they can be skimming the information, sell it to someone, and start hitting your credit card with purchases," warned Murray.

There is hope, if the United States follows in Europe's footsteps.

"The whole chip technology started [in Europe] many years ago, and most of the countries have employed a chip and pin," explains Murray. "So, not only do you have to use your card differently, you have to use a pin."

Experts consider the chip and pin combination safer than a chip and signature combination, since signatures are less secure and easily falsified. Murray says once Americans adjust to the use of chips, she expects pin numbers will become the next standard in credit card safety.

Meanwhile, Murray suggest consumers continue to protect their credit cards and information using a number of popular safety measures:

  • save the phone number on the back of your card into your phone contacts.
  • enable alerts for every time your card is used, allowing you to quickly know of a false charge
  • check credit card statements frequently and report any odd charges right away
  • for ultimate safety, and if you are willing to forgo the benefits of credit cards, consider a debit card since they do require both chip and PIN
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