SECURING YOUR CARD

By Tiffany Davis, assistant coordinator, and Ashley Price, certified personal financial counselor at the Personal Money Management Center

The U.S. credit card industry is shifting from magnetic swipe cards to chip and pin cards, called EMV cards. These cards are named after the three companies that originally began using the chip technology: Europay, MasterCard and Visa.

Chip cards better protect consumers from fraud. Fueled by recent data breaches at major retailers like Target and Home Depot, these cards will become the new normal. Half of all credit fraud cases occur in the U.S., and a big reason is because other countries around the world have already adopted EMV cards. When used, the chip card generates a one-time-use encrypted code that drastically reduces fraud because the chip is nearly impossible to duplicate.

Due to shifts in liability, retailers have been making the shift to EMV cards this month. In the past, fraud liability fell on the card issuer or processor. Now businesses who fail to upgrade may be left with liability. The shift to EMV has been slow. According to a Strawhecker Group study, only 40 percent of card holders have EMV cards, and only 27 percent of merchants were predicted to be able to accept these cards by the Oct. 1 deadline. Gas stations and ATMS won’t be required to upgrade until 2017.

If you don’t have an upgraded EMV card, call your bank. Millions of chip cards have been mailed out this week. Until then, do not worry, merchants will still be able to accept the magnetic swipe cards.

These new cards can still fall short of protecting consumers for online purchases. For online purchases, consider using secure payment options like Apple Pay, Visa Checkout or PayPal. Also, use websites that are secure with “https” in the URL on secure network connections.

Be aware of your rights and protections as a consumer. In regard to credit card liability, there are benefits to using a credit card over debit cards for in-store and online purchases. The reason for this is that debit and credit cards fall under two different consumer protection laws.

The Fair Credit Billing Act, Electronic Funds Transfer Act and Fair Credit Reporting Act all protect consumers.

  • The Fair Credit Billing Act provides protection to consumers and credit card use. Under this act, consumers are not liable for more than $50 of unauthorized activity. Consumers should report any suspicious activity to their credit card company as soon as it occurs.
  • The Electronic Funds Transfer Act provides protection to consumers with transactions that immediately withdraw money from an account, such as a debit card. Under this act, consumers must file a complaint with their financial institution within two days of unauthorized card activity in order minimize liability under the law. Consumers may be liable for as much as $500 if they do not report unauthorized purchases within 60 days from the last bank statement that included the incorrect information. After receiving a notice of unauthorized activity, banks then have 10 days to investigate.
  • The Fair Credit Reporting Act allows consumers to access their credit report for free as well as dispute inaccurate information. Consumers are allowed to access their credit report for free once a year from the three major credit reporting bureaus: Experian, TransUnion and Equifax. Which means consumers might choose to access their report once every four months to check their report for accurately reported information. Consumers must report any incorrect information in writing to the credit bureau. The only place to request a free credit report is by going to: annualcreditreport.com

The new EMV chip cards, paired with these three acts are in place to protect consumers and can be key in cases of fraud. For more information and to learn more about EMV chip cards and consumer protection, visit the Federal Trade Commission’s website or stop by the Personal Money Management Center in the Olpin Student Union Room 317.