Credit card security upgrade also a chance for fraud

The scammers are striking during the rollout of a new technology to thwart scamming.

It all has to do with the new chip-embedded credit cards.

Credit card companies have been mailing out credit and debit cards that offer greater security against fraud. The new cards are embedded with a chip that holds your payment data and provides a unique code for every purchase.

To use the card, you insert it into a “reader” for several seconds rather than swiping it. For every purchase you make, the chip generates a unique code that is good only for that transaction. These replace the cards that have only a black magnetic stripe that security experts say can be easily copied and misused. You might also have to sign or enter a PIN (personal identification number).

Not everyone has received their new cards, and those are the people getting gouged by the new scam, according to the Federal Trade Commission.

Those perpetrating it do so by posing as card issuers and sending emails to people telling them that to get the new chip cards, they must update their account by confirming personal information or clicking on a link to continue the process, the FTC says.

Replying with personal information makes you vulnerable to identity theft, while clicking on the link could help the perpetrators install malware programs that can steal personal information or crash your computer.

Here’s advice from the FTC:

  • “There’s no reason your card issuer needs to contact you by email – or by phone, for that matter – to confirm personal information before sending you a new chip card. Don’t respond to an email or phone call that asks you to provide your card number. Period.”
  • Even if you think a phone call or email might be legitimate, instead contact your card issuer at the phone numbers on your cards.
  • Don’t trust links in emails. Provide personal information through a company’s website only if you typed in the web address yourself and you see signals that the site is secure, like a URL that begins with https (the “s” stands for secure).

The FBI has issued a different kind of warning about chip cards: They can still be stolen and used for fraudulent online or telephone purchases.

In fact, other countries that are ahead of the United States when it comes to converting to the cards have seen a significant rise in online scams. Online fraud in the United Kingdom, for example, skyrocketed by 79 percent in the three years after the shift was made.

An FBI public announcement said consumers should closely safeguard the security of their new cards and PINs. Be vigilant when handling, signing, and activating a card as soon as it arrives in the mail, the agency says.

Also, review statements for irregularities and promptly report lost or stolen credit cards to the issuing bank. And shield the keypad from bystanders if you’re entering a PIN because the numbers are “vulnerable to cybercriminals who work to steal these numbers to commit ATM and cash-back crimes,” the FBI said.