Make us your home page
Instagram

New chip-based credit cards not foolproof against fraud

As the United States lumbers toward a new credit card technology to thwart data thieves like the ones who struck Target, payment security experts say the new system is far from foolproof.

The chip-based smart cards, already in use in much of the world, make it much harder to produce counterfeit cards. But the cards are less effective against the widespread and growing threat of bogus online transactions that require only account information.

EMV, as the technology is known, changes the game but won't prevent all fraud.

"It's not a panacea," said Paul Tomasofsky, an electronic payments expert who heads Two Sparrows Consulting in Montvale, N.J.

EMV, which stands for Europay/MasterCard/Visa, is a fairly old approach rooted in experiments to deter fraud with microprocessor chips embedded in payment cards in France in the 1980s. It spread throughout Europe and became a global standard.

But because of the sheer size of the fragmented U.S. payments system, and the huge cost to convert, the United States is one of the last countries in the world to cling to older technology.

There's general agreement that EMV alone would not have prevented the Target breach, in which thieves accessed data from as many as 110 million customer accounts. But EMV would have reduced the value of the information by making it almost impossible to clone the cards.

That's EMV's biggest boast, that it prevents counterfeit card fraud. "It does that spectacularly," said Jeff Hall, a security consultant FishNet Security in Overland, Kan.

That's only part of the challenge, however. Online fraud that doesn't require the presence of an actual card now accounts for nearly half of all U.S. credit card fraud, according to Fair Isaac Corp., and studies show that adopting EMV drives crooks to this card-not-present fraud.

EMV has a weakness at the point of sale. While data in the card's memory chip is encrypted when the card isn't in use, the data is momentarily vulnerable when customers pay.

Proponents of EMV say this isn't a big flaw because the chip spits out a unique, one-time-only security code to encrypt the data for transmission.

But critics say that if thieves compromise the card terminal or the register at just the right point, they can access the data before transmission, circumvent the one-time security code and get access to the information they want. The bulk of online merchants don't ask for the 3- or 4-digit security code on a card, Hall said.

But magnetic stripes aren't going away. In an effort to ease the conversion, the new EMV cards will still have magnetic stripes so they will work in stores that lack EMV equipment.

But magnetic stripes are easy to copy and clone. Avivah Litan, a financial services security analyst at Connecticut-based Gartner Research, called the existence of magnetic stripes on EMV cards "a very big security threat."

New chip-based credit cards not foolproof against fraud 01/21/14 [Last modified: Tuesday, January 21, 2014 9:05pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Tribune News Service.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Carrollwood fitness center employs scientific protocol to help clients

    Business

    In 2005, Al Roach and Virginia Phillips, husband and wife, opened 20 Minutes to Fitness in Lakewood Ranch, and last month they opened the doors to their new location in Carrollwood.

    Preston Fisher, a personal fitness coach at 20 Minutes To Fitness, stands with an iPad while general manager/owner Angela Begin conducts an equipment demonstration. The iPad is used to track each client's information and progress. I also included one shot of just the equipment. The center recently opened in Carrollwood. Photo by Danielle Hauser.
  2. Olive Tree branches out to Wesley Chapel

    Business

    WESLEY CHAPEL — When it came time to open a second location of The Olive Tree, owners John and Donna Woelfel, decided that Wesley Chapel was the perfect place.

    The Olive Tree expands its offerings of "ultra premium?€ extra virgin olive oils (EVOO) to a second location in Wesley Chapel. Photo by Danielle Hauser.
  3. Massachusetts firm buys Tampa's Element apartment tower

    Real Estate

    TAMPA — Downtown Tampa's Element apartment tower sold this week to a Massachusetts-based real estate investment company that plans to upgrade the skyscraper's amenities and operate it long-term as a rental community.

    The Element apartment high-rise at 808 N Franklin St. in downtown Tampa has been sold to a Northland Investment Corp., a Massachusetts-based real estate investment company. JIM DAMASKE  |  Times
  4. New York town approves Legoland proposal

    News

    GOSHEN, N.Y. — New York is one step closer to a Lego dreamland. Goshen, a small town about fifty miles northwest of the Big Apple, has approved the site plan for a $500 million Legoland amusement park.

    A small New York town, Goshen approved the site plan for a $500 million Legoland amusement park. Legoland Florida is in Winter Haven. [Times file  photo]
  5. Jordan Park to get $20 million makeover and new senior housing

    Real Estate

    By WAVENEY ANN MOORE

    Times Staff Writer

    ST. PETERSBURG —The St. Petersburg Housing Authority, which bought back the troubled Jordan Park public housing complex this year, plans to spend about $20 million to improve the 237-unit property and construct a new three-story building for …

    Jordan Park, the historic public housing complex, is back in the hands of the St. Petersburg Housing Authority. The agency is working to improve the 237-unit complex. But the latest plan to build a new three-story building for seniors will mean 31 families have to find new homes. [LARA CERRI   |   Tampa Bay Times]