Credit card security upgrades: America is catching up

Fighting data breaches with more secure payment technology


DETROIT – Following a string of high profile data breaches in the past year, more companies are shifting to payment methods more secure than the "swipe" credit and debit cards most Americans currently use.

You've probably become accustomed to swiping your cards quickly and easily to make purchases, but that form of payment is not the most secure available. In fact, the United States lags behind other countries adopting chip technology that makes it more difficult for data thieves to copy a consumer's personal information.

Starting with the Target data breach last December, consumers saw numerous retailers fall victim to hackers. The list of target companies in 2014 included Michael's, Neiman-Marcus, P.F. Changs, and Home Depot.

"It happened so often," said concerned card user Travis Wilson. "I don't know how these large companies can be breached as big as they are, so it's a big worry."

Racing Toward Technology Upgrade

Retailers, banks, and credit unions are now moving toward the chip technology. The team at Community Choice Credit Union in Farmington Hills says it is ahead of the game when it comes to upgrading customer security.

The bank is doing more to educated consumers on how to protect themselves while  also transitioning to EMV chip technology.

"I think we definitely are more secure now that the Target breach and other breaches have happened," said Community Choice assistant vice-president of risk management, Jodi Dabrowski.

The credit union has already begun issuing new credit cards with chip technology this year, and new debit cards will be coming in early 2015.

"It's going to be a little different because we're so used to... being real quick with our swipe and you're swiping even faster if it doesn't work. So, it's going to be a little change where you insert it, it's going to read it and then will kick it back out to you," said Dabrowski.

The ATMs and credit terminals will be reading tiny microchips that encrypt your information making it much hard to copy and reuse. Other countries report fraud has declined after the chip cards were introduced.

Mobile Pay, Another More Secure Options

"I think that's going to be a big improvement in the security of credit card transactions," said Odysseas Papadimitriou, CEO of CardHub.com.

Although he's looking forward to the new chip technology, Papadimitriou said virtual wallets, like Apple Pay, are another more secure option for consumers.

"Apple Pay allows you to pay without disclosing any of your personal information to the retailer you're making the transaction with," he said.

Papadimitriou also believes virtual payments are probably more secure than chip cards, but feels the new cards will catch on more quickly because, he thinks, consumers are more familiar with cards.

Ruth to the Rescue found some consumers who agree, saying they're a little wary of the mobile pay technology.

"I don't leave anything like that on my phone, it's just too risky," said Eric Gillamander from Northville.

Another shopper outside Home Depot added: "I'm very leery about it until I know a little bit more about it."

Papadimitriou also worries about what might happen when hackers turn their attention to our mobile devices.

"Mobile technology hasn't really been tested against viruses that are so common on our desktop computers," he said.

In addition to overcoming consumer concerns, Apple Pay isn't accepted everywhere because merchants are trying to decide which virtual payments they will accept and which ones they won't.

New Deadline Approaching

At this point, banks and retailers have a strong financial incentive for those who switch to the new chip cards. Starting in October of 2015, if fraud occurs, the business that hasn't upgraded to chip technology will pick up the costs.

"The liability shifts to the weakest point," said Dabrowski.

Finally, whatever upgrades we see in the next year, it's important not to forget one of the biggest consumer lessons of the past year, YOU need to protect your own accounts and payment information.

"If you're using a debit or credit card, that's in your name and that's your money. That's your credit report that it's getting reported on."

How To Protect Your Accounts

There's little doubt we will see more data breaches in the future. Working with the Better Business Bureau, Ruth to the Rescue has come up with these
guidelines to help you protect your credit or debit cards before, or after, you suspect they've been involved in a breach.

1) Stay calm. Consumers are not liable for fraudulent charges on stolen account numbers.

2) Check with the website of the retailer for the latest information. Type the store name directly into your browser. Do NOT click on a link from an email or social media message.

3) Beware of emails that claim to help you deal with the crisis. Those emails could be fake, hoping you'll click on a dangerous link or share personal information.

4) If your card was compromised, you will likely hear from the bank or card-issuer first. If you have questions, call the customer service number on your card.

5) Consider putting fraud alerts on all your accounts. Check with each bank or financial institution on how to do so. You can usually set a dollar amount that
will spark a fraud warning, if the company sees suspicious activity.

6) Monitor all your financial accounts carefully. If you have computer access, try checking your account weekly. Do not wait for the monthly statement.

7) If you see a fraudulent charge, report it to your bank or credit card issuer immediately so the charge can be reversed and a new card issued.

8) Keep receipts so you can prove which charges are legitimate.

9) Be careful about how often you use your debit card. If you debit card is hacked, thieves will be stealing your money, and debit cards do not have the same protections as credit cards. Make sure you know what kind of protection your account will offer.

10) Consider having a "dirty" credit card. This card would be used for all public transaction and online purchases. Ideally, you can pay it off each month, and
if it's hacked you'll have better protection. Use your debit card for getting cash, and use other credit cards for major purchases.

11) Change your passwords on financial accounts frequently. Also, make sure you create "strong" passwords that will not be easily guessed.

12) When you hear about a date breach, share that information with family and friends, so they can also follow these steps to protect themselves.

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