BOSTON (CBS) — It was chilling news for customers of the Quincy Credit Union. Information stolen from their debit cards was being used to withdraw cash in the New York City area.
Credit and debit card fraud costs banks and consumers billions of dollars a year.
There are changes underway in the financial services industry which should help keep money safer.
A common sight at the mall this holiday season was a shopper inserting a credit card into a reader, instead of swiping it.
Jason Oxman of the Electronics Transactions Association says that is the “Most significant upgrade to the payments infrastructure in our 40-year history of the credit card.”
All credit and debit cards are in the process of being replaced. Personal information will now be encoded in a chip instead of a magnetic strip.
EMV, or Europay, MasterCard and Visa cards will allow for safer transactions, Oman says.
“Every time you use your card, that chip that’s embedded in the card is going to generate a new security code that will not be repeated again when you use that card the next time,” he said.
That means no more “skimming,” which is when a fake card reader is placed over a legitimate reader so that personal information can be lifted from the magnetic strip.
This past fall, a fake reader was found on ATMs in Falmouth and Goffstown, New Hampshire.
A criminal also positions a pinhole camera over the ATM keypad to get video of a consumer entering a password.
Cambridge detective Brian O’Connor specializes in financial crimes. He has seen skimming operations run by local gangs and major organized crime rings.
Although he has seen skimming explode in recent years, O’Connor says “Once EMV is rolled out, you will see a decline in ATM skimming.”
While that may be good news, the new system isn’t going to be fully implemented for several more years.
An industry survey estimates that about 25 percent of cards now have the EMV chip.
That number is expected to jump to 73 percent next year, and 96 percent by 2017.
According to the Federal Reserve Bank of Chicago, larger banks in general are issuing new cards at a faster pace than smaller banks and credit unions.