Will new chips really put end to credit card fraud?

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With the new technology, your information is verified by the new card-reading devices to ensure authenticity and your information is more secure from criminals. (KTRK)

If you haven't received them yet, be on the lookout for new credit cards in the mail. These will have tiny chips inside to help protect against fraud. It's part of a new policy going into effect in a few weeks. Will it work and how effective is it?

Nadine Jolicoeur's dog is the reason she decided to open a natural pet food store. Now as a business owner, she'll have to comply with the new credit card policies that go into effect October 1.

"I think that's good for everybody. Because at the end of the day when there's fraudulent charges, we all end up paying for it," she said.

To help fight the war on fraud, Jolicoeur has equipped her stores with these terminals to accept "new" cards that are being issued to customers.

"There is chip and pin, and chip and sign," private investigator and IT expert Coleman Ryan said.

Ryan says this payment method is being implemented countrywide. Instead of swiping the magnetic strip on the back of your card, you'll insert the card into the machine -- chip first -- then either sign or enter a pin to complete the transaction.

For businesses that don't have these in place by the first of October, there could be a shift in liability if a fraudulent charge occurs.

"Well potentially they can be liable for credit card fraud, counterfeit cards, where in the past typically the bank would handle it," Ryan said.

With past cards, your account information was stored on the magnetic strip or with a merchant and could easily be stolen. With the chip technology, your information is verified by the new card reading devices to ensure authenticity and your information is more secure from hackers and criminals.

"We've seen the massive fraud. We've seen the Home Depots, the Targets, so clearly there's a problem that needs to be resolved," Ryan said.

The Chip and Pin technology has been in use for many years overseas and has proven effective in combating credit card fraud. Even though the deadline for merchants is October 1, some smaller banks are not up to date as of yet. If you haven't received new cards, be sure to inquire with your financial institution to request one with a chip.
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financecredit cardsfraudaction 13bankHouston
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