chip and PIN

Fraud and more fraud

March 31, 2015 By Liz Weston

A few days ago I called American Express because I wanted them to send us a new Bluebird card, since we hadn’t been able to find the prepaid card we used in Europe.

It turns out someone else used a fraudulent card with our number at an ATM last month, twice, each time withdrawing 50 euros.

We’d used the card since getting back, so we know it hadn’t been left behind. The thief had not only the card number but the PIN, so we suspect a skimmer was used to capture the information while we were abroad and the bad guys only recently decided to use it.

I’m delighted to say that, after a few false starts, I finally found an Amex employee who knew what she was doing, and the purloined amount was restored to a freshly-issued card.

Today, I got a letter that one of our credit card accounts had been frozen because of suspicious activity. It turns out someone impersonating me had called in to change our address to one in Winnetka, a nearby neighborhood in Los Angeles. Fortunately, Capital One froze the account before she could misuse it. We’ll have to be without a card for a few days while a new one is sent to us, but that’s the extent of our inconvenience.

These incidents underscored for me why it’s so much better to use credit cards (and the right prepaid card) in a world full of identity theft. If these thieves had gotten hold of my debit card, they could have drained our bank account and we’d be waiting to get the money back while transactions bounced right and left. That wait could be protracted if your financial institution questions whether fraud really occurred. With credit cards, you aren’t required to pay the disputed amount until the issuer completes its investigation.

Our recent brushes with fraud also underscore how important it is that Americans get the chip-and-PIN technology used in Europe and much of the rest of the world. Credit card issuers and retailers are in the process of transitioning slowly to this much more secure standard, starting with cards that have both a computer chip and the old-fashioned magnetic stripe. But the sooner we get to cards that must be used with a PIN for purchases, the better.

Some issuers publicly worry that we Americans will have a hard adapting to the new technology, which is absurd. It’s no harder to use a chip-and-PIN machine at a checkout register than it is to use an ATM. You stick your card in the little slot at the bottom of the checkout terminal, punch in your four-digit number and you’re done. And you’re also done with the vast majority of account takeover fraud.

Who offers real chip-and-PIN cards in the U.S.

March 14, 2014 By Liz Weston

Most of the rest of the world has adopted more secure chip-and-PIN credit cards–which can cause some problems for Americans traveling overseas.

When we were in Italy two years ago, we found our old-school magnetic-stripe cards wouldn’t work in automated kiosks. That included our British Airways card, which had a chip, but no PIN. Without a personal identification number to punch in, it was useless.

Unfortunately, many articles about where to get chip-and-PIN cards in the U.S. make the mistake of thinking chip-and-signature cards are the same thing. They’re so not.

Because we’re going to Europe again soon, I hit up Bill Hardekopf of LowCards.com for a list of U.S. issuers that offer the real deal. The few organizations on this list have many members that travel overseas. And here they are:

United Nations Federal Credit Union.. If you don’t actually work for the UN, you can become a credit union member by joining United Nations Association ($25 membership fee).

USAA. You must be a member of this financial services organization for active-duty military, veterans and their families.

Andrews Air Force Base Federal Credit Union. “You can join by becoming a member of the American Consumer Council which is open to all so essentially is open membership,” Hardekopf said. Membership is $5.

State Department Federal Credit Union. Same deal: you can join by becoming an American Consumer Council member.

Pentagon Federal Credit Union. You can join this credit union is you’re a member of one of a host of associations. If you’re not already a member of one, you can join Voices for America’s Troops for $15.

Or you can just wait, if you don’t have an overseas trip planned. True chip-and-PIN cards should be here by October 2015, when merchants without the terminals to process the cards and banks that have failed to issue them will have to pay for fraud. As Ron Lieber of the New York Times put it, “It’s an elaborate game of chicken, fitting for an industry where the major players spent years embroiled in a lawsuit.” Ultimately, though, more secure cards will benefit banks, merchants and consumers.

Our credit cards worked in Europe. Mostly.

May 7, 2012 By Liz Weston

We just returned from 10 days in Italy, with a plane change in Zurich. After writing about the troubles some U.S. travelers faced using their credit cards overseas, I’m happy to report that we were able to use ours in most places with no problem at all.

Of course, we visited tourist-centric locales (Venice and Florence) where the merchants are used to seeing our old-fashioned magnetic stripe credit cards. Our U.S.-style cards are less secure than the “chip and PIN” model embraced by other countries, but restaurant staffs and shop clerks accepted them without a fuss.

There were a few exceptions:

We were out of luck when it came to the automated kiosks at most vaporetto (water bus) stops. As I wrote in my column, such kiosks require the more secure cards. We brought our British Airways card, which is a “chip and signature card,” but that proved useless. Without a PIN, the card wouldn’t work at automated kiosks. (U.S. debit cards wouldn’t work, either.)
A few merchants insisted on cash. I ended up withdrawing more money than I expected from ATMs, and ran into a glitch there—turns out the 250 euros I kept trying to withdraw equaled more than my daily limit. Once I got the currency math right, I was able to get cash when I needed it at a decent exchange rate—which was somewhat offset by the $5-a-pop transaction fee.
The bad guys in Europe were quick to exploit our less-secure technology. Two days after we returned, somebody used our Capital One card to make three fraudulent charges of $442.58 each in the Netherlands. Fortunately, users aren’t responsible for fraud on their credit cards. For exactly that reason, I wouldn’t use our less-secure debit cards anywhere but an ATM attached to a bank branch. I don’t want to give the scamsters access to my bank account.

For our next trip, I might arrange to get a true chip-and-PIN card, like the one Diners Club now offers its members. Another option is the prepaid Cash Passport card. Or maybe, by then, U.S. issuers will get with the program and make true chip-and-PIN cards available here. I can dream, can’t I?