Are Chip and Sign Credit Cards as Safe as You Think?

There are many steps you can take to improve your credit, but none may be as important as monitoring your credit report for fraud. As hackers get more sophisticated, so too must credit card issuers. A recent technological development, EMV chips, have been touted as the latest and greatest way to protect consumers. Unfortunately, it may be too good to be true.

This week the FBI issued a warning to the credit industry about this EMV chip. Their Internet Crime Complaint Center made a statement that warns these new chips don’t do anything to prevent online fraud or the type of point-of-sale issues we saw recently in the Target hack.

The warning also noted the weakness of their signature based system, which is often called “chip and sign” instead of the more secure “chip and PIN.” They instruct merchants to require a PIN whenever possible. As the FBI says in their statement, requiring a PIN in addition to the chip better utilizes the security features that are built into the EMV card.

This warning is not news to experts in the industry, but the seriousness of the release does emphasize the frustration many security experts are feeling. The FBI wants their alert to serve as a wake-up call to the banks and card networks. These companies are considered to be standing in the way of making PINs the standard in the U.S. Note that PIN authentication has been the standard in the rest of the world for years.

Even with this newest system, the United States is well behind the curve compared to the rest of the world when it comes to payment technology. Many international markets moved to chip-and-PIN systems more than a decade ago.

This latest chip-and-signature system is much more relaxed than what experts would like to see, yet a recent study showed that fewer than two-thirds of retailers in the U.S. have been able to implement this system before the industry deadline that we passed earlier this month.

When the FBI is warning that there are major security breaches in credit cards, it’s up to the public to take notice. Leaf Credit Solutions can help you improve your credit score in a number of ways, but poor security by these large banks and card issuers can be a serious issue for consumers moving forward. In this day of hackers and security breaches, we need to be doing more – not less!

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