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Consumers Question Credit Card Safety

Many consumers believe new credit cards being issued by banks don’t go far enough to protect card data or prevent fraud, according to a survey by the National Retail Foundation.

“The chip cards are a step forward but shoppers are concerned that they don’t go nearly far enough,” NRF Senior Vice President for Government Relations Mallory Duncan says in a release. “Unless the new cards require the use of a PIN, they will only provide half the safeguards needed to stop increasingly sophisticated criminals. The card industry’s refusal to give consumers the full protection they want continues to be a huge disappointment.”

Starting Oct. 1, there will be a major overhaul in how credit card transactions are processed and who is responsible for fraud costs. Under current credit card industry rules, banks are responsible for fraud losses when a counterfeit card is used and retailers are responsible when the person using the card is not the legitimate cardholder.

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After the new rules go into effect, banks will no longer honor their share of fraud costs if the card used is a chip card and the retailer does not have a chip card reader. Many retailers believe the liability shift is unfair because the chip reduces banks’ exposure to fraud while the lack of a PIN leaves retailers exposed to fraud.

The new cards, which banks have been rolling out over the past year, use EMV technology – short for Europay MasterCard Visa – to store data on an encrypted computer microchip. But unlike EMV cards used around the world for more than 20 years, which include a PIN, most cards being issued in the United States continue to use a signature to approve the transaction.

The majority of those surveyed (62%) said they prefer chip-and-PIN cards over cards that just use chip and signature, and 63% said chip-and-PIN cards provide more data security than those that don’t. Among Millennials, the preference for PIN was even stronger, at 71% of those between the ages of 18 and 24 and 66% for those ages 25-34.

Contrary to some banks’ claim that consumers don’t want to have to remember a PIN, the survey found 83% of consumers who say a PIN is more secure would consider it worthwhile even if they had to remember a different number for each card.

The survey also found 71% of consumers with a credit card have at least one chip card in their wallets, but that only 43% of credit cards are chip cards since most consumers have more than one card. Only 47% of consumers with a chip card have used it in a chip reader.

The online survey of 2,035 U.S. adults ages 18 and older was conducted for NRF Aug. 27 to Sept. 2 by ORC International.

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