New era of 'chip' credit cards stirs security, liability issues

Greetings everyone!  We your Accessibility team at www.sterlingcreations.ca would like to share a very important article with you.  One that was published some time ago but we feel that it is important enough for it to be republished one more time.

Please take a few minutes to read about the ramifications of these new credit card chips.  Security you may say, but there are some definite concerns for credit card users.

Have a great day.

Your Accessibility team

 

 

New era of 'chip' credit cards stirs security, liability issues; Double use
of same PIN could pin losses on user
   
Ellen Roseman
The Toronto Star, Nov. 9, 2008

 

Credit card issuers in Canada are moving to a new system for fighting fraud.

 

Each credit card will have an embedded computer chip that can store and
process data more securely.

 

And when presenting your card for payment at a store, you will enter a
personal identification number, just as you do for debit cards.

 

The new cards will still have a magnetic stripe on the back to ensure they
are accepted in other countries.

 

The United States is not embracing the chip. But some European countries are
ahead of Canada in adopting it.

 

Now that the first chip cards are being sent out, I'm fielding lots of
questions on the new technology.

 

Question: I have trouble remembering too many PINs, so I switched the code
numbers for my CIBC Aerogold Infinite card to the one I use for my CIBC bank
card. If I am the victim of credit card fraud, will the bank say I'm liable?

 

Answer: Visa Canada insists nothing will change once chip cards are widely
available.

 

"Zero liability does extend to PIN transactions," says Visa spokesperson Amy
Cole.

 

"Cardholders must take reasonable precautions to protect their PIN. Visa-
issuing financial institutions will outline the steps in their respective
cardholder agreements."

 

Visa Canada has said it's not a problem to use the same PIN for both debit
and credit cards.

 

But according to some banks, doing so could put you at risk of being held
responsible for unauthorized use of credit cards, contrary to the zero
liability policy.

 

The problem: The issuers of Visa and MasterCard cards are free to write
agreements imposing conditions on PIN use that could make cardholders liable
in certain circumstances.

 

A voluntary code of practice for credit cards, similar to one that already
exists for debit cards, is in the works. It can't come soon enough.

 

Q: I received my new RBC Visa chip card 10 days ago. Much to my surprise and
horror, it was noted that "for your convenience, we have set the Personal
Identification Number on your new chip card to match the PIN you currently
use for your RBC client card."

 

I was deeply concerned that RBC felt it had the right to disclose my private
and personal PIN.

 

A: Setting the PIN on the new chip card to match the PIN on the client's
debit card was done for convenience, according to bank spokesperson Jackie
Braden.

 

"No one within RBC knows or has access to these PINs. All PINs are
encrypted, " she said.

 

"We advised clients in the card mailing that it is a good practice to have
different PINs for different cards and to visit their branch to change the
PIN."

 

Why are banks lifting the PINs from customers' debit cards if they don't
approve of the practice?

 

This is a mixed message that will only result in more confusion.

 

Q: Will I use a PIN when doing transactions on the phone or the Internet
with a credit card?

 

A: No, you won't. The chip and PIN technology is designed for face-to-face
encounters in retail settings.

 

Credit card orders by phone or online may involve your being asked for a
three-digit code printed on the signature strip. This code (called CVV2) is
designed for situations where the card is not present.

 

Some retailers, such as Air Canada and Best Buy Canada, have gone a step
further in adopting Verified by Visa.

 

This requires cardholders to get a special password they use only when
making purchases at specific companies' websites.

 

Ellen Roseman's column appears Wednesday, Saturday and Sunday.

 

Email eroseman @ thestar.ca

 

 

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