Cards chipping away at crime?

By now you probably have received a small gift from your bank or credit card company or both: a card with a visible little chip embedded in the plastic. This is the year we’ve welcomed them into our financial lives, but have they solved every problem? Not quite, and not for travelers.

Previously, we swiped cards that had only a magnetic stripe. Those cards were an easier target for thieves, who could steal and duplicate sensitive financial information. Several large merchants suffered enormous problems.

Chipped cards, also known as EMV (for Europay, MasterCard, Visa), are standard in many countries and were designed to address credit card fraud. A code that’s unique to the transaction changes each time, CreditCards.com reported in its FAQs about the cards.

It isn’t swiped like the old striped cards; it’s dipped, which usually means inserting the card in the “reader” for about 15 seconds until a grating beep bids you remove it. The “liability shift” — that is, making merchants who don’t accept chipped cards responsible for fraud, not the credit card company — took place Oct. 1 in the U.S.

When we say “liability,” you should understand that it’s not yours. “Consumers are never liable for fraud,” said Sean McQuay, a credit and banking expert with NerdWallet.com, a financial advice website. “That’s the really good news.”

But McQuay noted that EMVs don’t completely solve fraud issues, and that’s important for travelers to know.

There are, he said, three kinds of fraud:

Duplication fraud: With magnetic stripe cards, thieves copied the information, but the chip makes that less likely.

NerdWallet reported that such fraud dropped by nearly two-thirds when Britain introduced chipped cards more than a decade ago.

Stolen card: Chipped cards from most U.S. issuers generally don’t solve that problem. Abroad, cards are often used with a personal identification number. In the U.S., a signature is required; a PIN is less common. Of course, a PIN can be stolen by a thief crafty enough to look over your shoulder (then he or she would have to grab your card), but a signature is fairly easy to fake.

Online fraud: “EMV has nothing to do with that,” McQuay said. And that may be the biggest issue for travelers, who accounted for more than half-a-trillion dollars in online travel-related purchases in 2015, according to Statista.com . If you’re a traveler who pays for hotels or airline tickets online, be especially careful.

In Britain, fraud for what’s called “card not present” transactions increased 120 percent from 2004 to 2014, NerdWallet reported, adding, “It’s likely that a similar trend will occur in the U.S. after the EMV liability shift.”

— Catharine Hamm, Los Angeles Times

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