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Chip Cards Still Pose a Risk for Identity Theft
Posted on 2016-02-10 08:00:40
Where there is a will, there’s a way. That seems to be the mantra of identity thieves who come at identity theft from a new angle when something gets in their way. Such is the case with chip or EMV cards—credit and debit cards with an embedded microchip. What is an identity thief to do? One thing is certain. Identity thieves will adapt and find new ways to steal identities. But for now, time is on their side.
Magnetic Stripes vs Embedded Chips
Anyone who has used a credit or debit card is familiar with the magnetic stripe on the back of the card. The magnetic stripe contains information about the cardholder account. It didn’t take criminals long to figure out how to clone the magnetic stripes, and credit card fraud has been a huge problem ever since.
Chip cards are much harder to counterfeit. Each transaction encrypts different data. A clone of the card would be easily identified as a fake if it were used because the chip terminal would recognize the data from a previous transaction.
Millions of US cardholders have now received a new credit or debit card with an embedded chip. But what is still on the back? A magnetic stripe! That’s because it will take several more years for a full transition to chip technology. Until then some merchants cannot read cards without a magnetic stripe. Until those ubiquitous magnetic stripes are gone, the risk for identity theft from cloning a card is still strong. Some would even say the United States has become even more of a target for credit card identity theft because we are still in the transition stage while other countries have long moved on. The New Identity Theft Risk Identity thieves have a way of staying one step ahead of the latest technology, and they won’t give up because of chip technology. One new workaround may be opening new credit accounts instead of using an existing account for credit card fraud. Statistics seem to support this theory. Last year (2015) saw a noticeable decline in fraud to existing accounts and a rise in fraud from new accounts. What does this mean to consumers? Pay attention to your credit report! If you only check your credit report once a year, you could be in for a big surprise the next time you take a look. A credit monitoring service will check your credit report daily and notify you whenever a new account shows up on your credit report. Score one for the consumer!