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Chip and PIN Credit Cards Finally Explained

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Chip and Pin Credit Cards Lower Fraud by 700%

Chip and Pin Credit Cards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • It will take at least 5 years for Chip and PIN (or EMV) transactions to make up the majority of retail card processing in the U.S.
  • Most large retailers are likely to implement Chip and PIN technology over the next two years
  • Other technologies, like mobile or electronic wallets (e.g. Apple Pay), could become the preferred payment method over Chip and PIN card technology due to their ease and advanced security.
  • Although Phase 1 (Chip and Signature) will prevent credit card fraud by making credit cards harder to clone, it WILL NOT make them harder to use if they get into the wrong hands. Therefore, continuing to closely monitor our accounts and personal information will help you avoid becoming a victim of fraud.
  • Phase 2 (Chip and PIN) WILL make credit cards harder for thieves to use, which is even more reason to support the transition to the new technology.

John Sileo is an an award-winning author and keynote speaker on keeping your organization from becoming the next data breach headline. John specializes in making security entertaining, so that it works. John is CEO of The Sileo Group, whose clients include the Pentagon, Visa, Homeland Security & Pfizer. John’s body of work includes appearances on 60 Minutes, Rachael Ray, Anderson Cooper & Fox Business. Contact him directly on 800.258.8076.

4th Day: Holiday Shopping Quiz – Is Credit or Debit Smarter?

Holiday Security Tips: On the fourth day of Christmas, the experts gave to me, 4 pay solutions!

True or False?

When you use a debit card, funds are more secure because they are drawn directly from your bank.

False.  While it’s true that funds are drawn directly from your bank, it actually makes it harder to get the money reimbursed while the issue is being resolved if fraud does occur.

 You can receive a reimbursement for debit card fraud up to a year later.

False.  Debit cards generally only reimburse fraudulent purchases if you catch them within 60 days.

 It is safer to use a credit card than a debit card.

True.  When you use a credit card, nothing is withdrawn from your bank account immediately. Pending transactions can take several days to clear. In addition, credit cards uniformly give you more protection than debit cards and your maximum liability is capped at $50.

All checks are created equal.

False.  If you have to pay by check, make sure you use high security checks. Security checks should include visible fibers, true watermarking, full-feature hologram (like on credit cards) and protection against multiple chemical alteration agents (not just fingernail polish remover).  This makes it much harder for identity thieves to “wash” your checks with acetone and put their own names in the “pay to” field. Also, sign your checks with a gel-based pen that cannot be easily dissolved.

If you failed this quiz, don’t worry, as long as you remember the answers when you’re shopping!  Wishing you straight A’s this holiday season! On the fifth day of Christmas…

To review our tips from previous days, click here.

John Sileo is an an award-winning author and keynote speaker on identity theft, internet privacy, fraud training & technology defense. John specializes in making security entertaining, so that it works. John is CEO of The Sileo Group, whose clients include the Pentagon, Visa, Homeland Security & Pfizer. John’s body of work includes appearances on 60 Minutes, Rachael Ray, Anderson Cooper & Fox Business. Contact him directly on 800.258.8076.

U.S. is Dumb About Smart Cards

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The typical US consumer still swipes their card, credit or debit, with those same old black magnetic stripes. And, we hold our breath and hope they work, and don’t lead to erroneous (fraudulent) charges we have to defend. The rest of the world has switched to Smart cards, according to Peter Svensson, The Associated Press, in The Denver Post. “The problem with that black magnetic stripe on the back of your card is that it’s about as secure as writing your account information on a post-card”.

Svensson comments “Smart-cards (chip-based cards) can’t be copied, which greatly reduces the potential for fraud. Smart cards with built-in chips are the equivalent of a safe:  They can hide information so it can be unlocked only with the right key”.

This begs the question, why is the US lagging in this technology? How do we re-vamp our system to promote smart-card transactions? Some experts maintain that it is a lack of demand by everyone from consumers and issuing banks to retail establishments. In essence, we don’t want the added security. This, of course, is just a smoke screen to obscure the underlying issue: no one wants to pay for it. Consumer don’t feel like they should pay for the technology (through higher card fees) even if it makes them safer (Haven’t we always been pretty safe?). Banks don’t want to pay to issue higher-cost cards with chip technology (they probably think it is cheaper to weather the costs of fraud – it is not). And retailers don’t want the added expense of new, more sophisticated equipment.

For the sake of a short term buck, all three groups are willing to sacrifice long-term safety, viability and profits. Does anyone else out there feel like America can be embarrassingly short sighted at times?

Smart cards are recognizable by the fingernail-size gold contacts embedded on one side of the plastic. In Europe, rather than turning your card over to a waiter, the waiter presents a wireless payment terminal, has you swipe your card and enter your PIN without ever losing sight of the transaction. The window for fraud drops nearly to zero since you are actively involved in the transaction.

What can you do to help? Let your financial institution know that you value the security of smart-card technology. According to Richard Sullivan, senior economist at the Federal Reserve Bank of Kansas City, in 2006, 9 cents out of every $100 paid by card in the US ended up in the pockets of criminals (and not on the bottom line of the credit card company or retailer). The comparable figure for Spain was 2 cents. Let your bank know that they can save approximately 7% of every dollar they earn (a high ROI for a bank) by catching up with the times.

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John Sileo is America’s leading financial keynote speaker on identity theft and non-technical data security (the human element). His clients include the Department of Defense, Pfizer, Homeland Security and the Federal Reserve Bank. Contact him directly on 800.258.8076 and reference smart cards for more information.

Citigroup Data Breach – How it Affects Your Wallet

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This week’s news of the theft of private data comes from Citigroup. Seems that even the most reputable organizations can be exposed to the ever-more frequent data breaches we read about. You’ll likely recall the recent news of Sony, PBS, Epsilon and Lockheed Martin.  Regrettably, the list is growing by the day. It affects me, and likely, it affects you. Now what?

First, arm yourself with the facts. See the attached articles.

  • http://blogs.wsj.com/deals/2011/06/09/citigroup-data-breach-4-tips-to-protect-yourself/
  • http://www.reuters.com/article/2011/06/09/us-citi-idUSTRE7580TM20110609
  • http://www.informationweek.com/news/181502068

Second, remember to protect your most important data (this information, on its own, or in any combination, is a jackpot to an identity thief):

  • Social Security number
  • Date of birth
  • PIN
  • Credit Card numbers
  • Bank Account numbers
  • Birthdate

Third, never reply to an e-mail requesting personal information. Unless you originate the communication, suspect the worst and do not respond. This is referred to as “Phishing” and the results are never good.

Fourth, if you think your credit card has been compromised, call and request a new card. The phone number is on the back of your card, and the associates answering your call love serving as a hero to you and your credit. They’re awesome folks.

And finally, just pay attention. If your intuition is triggered, there’s likely good reason. You’ll never regret being cautious.

You should be receiving a notice from Citi if your actual data was compromised. In the meantime, don’t be afraid to Freeze Your Credit, just in case.