Credit Card Fraud Continues Without Chip-In Security

By: Cliff Ritter on August 13, 2012

Guaranteed security is almost an impossible proclamation for anyone person or business to make. Police can’t guarantee that neighbourhoods will be safe from criminals pulling breaking and entering crimes.

Oil companies can’t guarantee that their pipelines will not burst and destroy the environment and credit card companies can’t guarantee that criminal hacking into card information will be foolproof. In other words security can be promised, but a guarantee is not likely. That being said measures can be taken to ensure that security is beefed up to as high as it can be.

For credit card safety Canadians have been able to have an extra layer of security through the chip and PIN technology available. Seen as a hassle to many for need of another PIN to be entered, it is described by the providers as “an extra lock on the front door”. With the chip in place it becomes much harder for criminals to hack into the account behind the card; according to Visa Canada’s head of payment security Michael D’Sa, criminals have not cracked the chip security yet.

Unfortunately there are some locations from retail stores to restaurants that have not brought their payment terminals up to speed to process the chip, instead still using the magnetic stripe on both credit and debit cards. It is the swiping of these stripes that leaves consumers vulnerable to credit card fraud as according to D’Sa the stripe is not encrypted like the chip.

Banks will investigate a purchase made by the swipe of a card when chip technology is accepted to help prevent fraud at those locations. Apparently the banks will suspect the stripe of a card was copied and used illegally if the chip was not used, which along with consumers cautiously watching their balances is their way of helping to fight fraud. But with many locations without the chip technology implemented or with their point of sale terminals vulnerable to being taken and hacked into; that extra security is still impossible to guarantee from hackers who target the older technology.

Much is being done to combat this growing level of crime but much more still needs to be done. The RCMP has reportedly dismantled a criminal ring responsible for over $100 million of credit card fraud out of Montreal.

Unfortunately according to Visa Canada credit card fraud in Canada rang in at $436 million in 2011, which was actually up from 2010. Busting these rings of organized crime will help battle more sophisticated forms of fraud but with cases of fraud rising year over year, it becomes imperative security be boosted as much as it can through the chip technology. Visa Canada also says it can’t phase out the use of older swipe cards until the implementation of chip and PIN technology nationwide happens; in other words get that chip on the shoulder as soon as possible.