Outdated Technology May Allow Credit, Debit Card Fraud to Rise


U.S. credit and debit card fraud is on the rise, reports NPR. One survey found that nearly a third of American consumers have reported credit card fraud in the past five years. Part of the problem is that U.S. card issuers rely on security systems that lag behind measures taken in other countries. “The credit and debit cards that most Americans use are really surprisingly vulnerable to fraud,” says Andrea Rock of Consumer Reports. “Because, unlike cards in most of the rest of the world, they rely on outdated technology.”

“The account information that’s needed to make a transaction on American cards is stored, unencrypted, on a magnetic stripe on the back of each card,” she says. That information is easily copied and reproduced on a bogus card. Rock says that in general, thieves prefer to target debit cards, which allow them to get cash from an ATM, instead of conducting risky transactions in a store. Credit and debit cards are much more secure in Europe, where account information is in a computer chip that’s embedded in the card, instead of on an easily read magnetic stripe. U.S. credit card issuers, Rock says, “claim that losses due to fraud here don’t yet exceed the cost they’d incur in switching to the new technology. But the merchants say that that’s because the banks shift much of the cost burden for fraud onto them, anyways.”

Comments are closed.


You have Free articles left this month.

Want access to all our reporting? Subscribe for unlimited access or login.