3OYS: New credit cards 'chip' away at fraud

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By Tami Hoey By Tami Hoey

PHOENIX -- Banks and major financial institutions say they have had enough of the hacking, and are finally doing something about it.

Kaija Wilson, a Valley consumer, says she was affected by a recent data breach. “I got Target. I was involved in that, so I had to get sent a new card and stuff. I started shopping with cash."

It’s become an all-too-frequent problem. Target, JP Morgan Chase, Home Depot, PF Chang's and Neiman Marcus have been among the major retailers hacked by crooks who stole consumer information.

"The problem right now in the U.S. is this magnetic strip is all a hacker needs to basically replicate this card, and there's no way for a retailer to know that it's a fake card," says Ken Colburn, a computer and technology expert who runs a company called Data Doctors.

But he says there's good news when it comes to consumers who want to protect their information. "What the industry is going to require is really pushing retailers to adopt the chip and PIN system by October of 2015."

Some consumers have already received credit cards with the microchip inside. It’s also known as chip and pin, chip and signature, or EMV. No matter what you call it, the chip is supposed to fight credit card fraud. According to Colburn: "It's going to have a big impact on some of that basic fraud."

New cards with the microchip make it more difficult for thieves to counterfeit because after you swipe the card, you have to enter a "PIN" that only the card holder knows. The technology has been standard for years in Europe and has been successful in fighting fraud. Colburn adds: "You have to insert the card into the device, into the terminal. It stays in there, then it goes through a processing, verifying that it's a valid card. And then in order to ensure that it's you, you then have to tap in a PIN."

Wells Fargo is just one bank that's starting to use the chip card and tells 3 On Your Side in an email: “We are also testing the technology with our debit cards and will be prepared to issue chip-enabled debit cards on a broad scale in the coming year, as more merchant terminals are upgraded to accept EMV-compliant cards in the US."

"Basically it's just an all-inclusive machine so we just swipe on the side." Lori Hashimoto owns the Hana Japanese Eatery in Phoenix.  Her restaurant is now using an updated terminal so cards with the microchip can be processed as well as the traditional cards. "As of recently we've only started seeing the cards with the chips in them, I would say in the last month or so."

The leased machine she says is working pretty well. And she's glad technology has finally improved. "It does make me feel more secure. It makes me feel more secure for my business as well as the customer."

Not all of these chip cards will require a pin number. Just remember, having the chip will back up the information found on the magnetic strip. If those two agree, you crack down on fraud.

For more details visit: www.wellsfargo.com/credit-cards/features/chip-card/faqs/