Security Flaw in Chip Credit Cards Puts Consumers’ Credit At Risk
The recent proliferation of EMV credit cards – which stands for Europay, Mastercard and Visa – has long been touted as a safer option for consumers. However, new research has revealed a security flaw in these “chip” credit cards, which may put consumers at risk.
The chip-based card system was initially implemented as a way to circumvent thieves who had figured out how to copy the magnetic strips on common credit cards, thereby using consumer credit accounts fraudulently. Though EMV cards have both a chip and a magnetic strip, industry insiders claimed counterfeiting would be nearly impossible. Unfortunately, it seems there is a flaw in this logic.
Although chip cards are becoming increasingly more common, many non-EMV cards are still in circulation. Additionally, most chip cards are from existing consumer accounts that have been upgraded from the simpler magnetic strip card to the EMV. Thus, counterfeiters are able to adjust the magnetic strips on EMV cards to make them appear to card reader machines as though they simply haven’t been upgraded to EMV yet. If the machines are tricked into ignoring the chip authentication process, thieves can once again fraudulently use stolen credit cards.
This glaring concern can be somewhat countered by retailers using chip card readers with built-in encryption. Unfortunately, card reader upgrades are costly and many retailers have not invested in encryption technology as of yet.
Until there is more widespread use of EMV cards and encrypted card readers, consumers should be aware that their credit accounts remain at risk.
Image via Flickr/andresrueda