Credit Card Safety Chip And Pin Not Enough
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Credit Card Safety: Why Chip and PIN Isn’t Enough
Credit cards and debit cards are generally considered secure for making purchases. However, as with any security measure, there are those who attempt to exploit it. Criminals have developed increasingly complex methods to access bank accounts by obtaining consumer details, such as scanning and copying the magnetic strip on the back of cards to create duplicates and siphon funds.
Chip and PIN was introduced to make it significantly harder for criminals to create usable copies of bank or credit cards, thus reducing security risks associated with card transactions in the UK. This system was hailed as a substantial step in reducing crime.
According to Moneynet, a consumer finance comparison site, the advent of Chip and PIN has boosted the popularity of debit and credit cards. A survey by A&L revealed that 63% of people prefer to pay by card, with 11% attributing their preference to Chip and PIN.
Unfortunately, just months after the mandatory nationwide implementation of Chip and PIN in the UK, reports have emerged of security breaches within the system.
Shell, a major petrol station chain, recently suspended Chip and PIN payments at 600 UK locations after over £1 million was fraudulently removed from customer accounts. Criminals infiltrated tamper-resistant PIN pads to commit theft, forcing a return to the supposedly less secure card swipe and signature system.
The Association of Payment Clearing Services (APACS) emphasized that this fraud was isolated to one petrol chain, though two BP stations in Worcester were temporarily shut down amid a scam that saw £250,000 taken from 167 people, whose card details were subsequently used in Bangkok.
While Chip and PIN, requiring customers to verify transactions with a PIN instead of a signature, made it harder for criminals to use stolen cards, overall card fraud in the UK fell by 13% to £439 million last year. Card counterfeiting and lost or stolen card fraud dropped by 24% to £58.4 million. However, fraudsters have discovered ways to bypass tougher security.
Today, with internet and phone shopping, fraudulent transactions can occur using only the card number. Moneynet's Chief Executive, Richard Brown, stated, "Criminals are increasingly turning to the Internet to relieve consumers of their money and goods as Chip and PIN has made credit card fraud harder."
There’s also been an uptick in criminals copying cards in the UK and using them in smaller shops lacking Chip and PIN devices, or abroad where Chip and PIN is less common, circumventing the added security.
In response to these threats, major card providers aim to reassure consumers. Lloyds TSB has pledged to close security gaps and reimburse anyone affected by fraud. Barclaycard advises customers to check their accounts regularly for unrecognized transactions and report any discrepancies immediately.
Disclaimer: All information in this article is for general informational purposes only and should not be considered as advice under the Financial Services Act 1986. It is strongly recommended to seek professional and legal advice before entering into any binding agreements.
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