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, there were over 13.7 fraudulent credit card transactions that 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 have been able to make these illegal transactions. To help, new standards will go into effect in hopes of reducing the amount of fraudulent credit transactions.
On October 1, 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 that are able 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 that 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.
Sources state that 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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