False Sense of Security?

Despite hiccups, chip cards reduce in-store fraud, but online hacks persist

If you’re like most U.S. consumers, you use your credit or debit card regularly—possibly daily. At some point in the last two years, it’s likely you were issued new cards with chip technology. When you go to pay for items at a store, you now may be required to insert your card into the chip reader, rather than swipe the magnetic strip on the card’s back.

That little chip is known as Europay, MasterCard, Visa (EMV) technology. EMV is the global standard for credit and debit cards that use computer chips to authenticate transactions.1 It’s meant to make point-of-sale transactions more secure to prevent identity and card fraud. Unlike the magnetic strip, the chip creates a unique transaction code that can’t be reused.2

Of course, you may have dealt with some of the hiccups that come with chip card adoption. First, retailer migration to the technology has been slow. Major credit card companies gave retailers an Oct. 1, 2015, deadline to install chip card readers in their point-of-sale terminals. After that date, if a counterfeit credit card was swiped in a store that didn’t have a chip card reader, the liability fell on the merchant. Previously, the liability belonged to the credit card company.3

By October 2016, just one-third of retailers had migrated to EMV point-of-sale readers.4 Some of this lag time was due to a slower testing and certification process: Every EMV-enabled terminal must be certified by EMVCo, which manages the EMV specifications and the credit card brands the business accepts for payment.5

Furthermore, faulty chips and chip readers, and slow processing times left many customers frustrated by longer checkout lines and caused some retailers to resist the move to a new chip-reading system.6

So, have the growing pains been worth it? Has EMV technology helped resolve card and identity fraud in the United States?

While chip card technology has helped reduce fraudulent activity in stores, experts say it may be giving consumers a false sense of security because it has spawned a new rise in online fraud.7 So much so that in 2016, online fraud rose 40%.8

Physical fraud made more difficult?

The good news is that EMV technology seems to help curb in-store, or card-present, fraud. Chips are safer and encrypt information more securely than magnetic strips.

For retailers who upgraded to EMV card readers, Visa reported a 47% decline in card fraud in May 2016 when compared to May 2015. According to MasterCard, merchants who had adopted EMV technology or were close to implementing it experienced a 54% decline in counterfeit card fraud in April 2016 compared to April 2015.9

Also, merchant adoption is beginning to pick up. Researchers say that in the next three to four years, 84% of merchants will have made the migration.10 Even some of the user complaints are being tended to: In March, for example, Square, a financial payments firm, introduced an update to increase payment speed.11

Still, experts say, chip cards haven’t stopped fraud. They’ve just forced criminals to find new methods.

Card-not-present fraud on the rise

While EMV technology seems to be effective at preventing card numbers and information from being stolen from point-of-purchase terminals, it is not used for online transactions, which means fraudsters are moving to the web and committing what’s called "card-not-present" fraud.

One study predicts that between 2016 and 2020, up to $10 billion in fraud will be committed. The majority of that, researchers estimate, will be from credit card numbers stolen online and through mobile channels. Because you’re not required to enter a PIN or provide a signature when making online purchases, all hackers generally need to commit online fraud is a card number.12

There are other types of card-not-present fraud consumers should be aware of, too.

Application fraud happens when hackers steal your information to open new credit card accounts. An example is the Anthem health insurance breach in 2015. Researchers estimate this type of fraud will account for $2.1 billion in fraud by 2020.

Another type of fraud is account takeover. This occurs when hackers find ways to log in to consumer and business accounts online and empty money from the accounts. Researchers suspect this type of fraud to reach $1 billion by 2020.13

Online fraud

As EMV technology continues to help defend consumers from point-of-purchase security breaches, how are retailers and credit card companies working to combat soaring rates of online fraud? Could EMV technology move online?

Some retailers have explored ways to boost online payment security, including fraud detection software—such as 3-D Secure or tokenization, which don't require retailers to store sensitive customer information on their networks.

You also may soon see verification systems that require two steps when checking out. However, as Avivah Latin, research vice president for Gartner, a technology research corporation, said, he expects Visa and MasterCard to eventually direct retailers to adopt EMV online because "credit and debit cards aren’t going anywhere."14

—compiled by Amanda Hankel, contributing editor


  1. SquareUp.com, http://squ.re/2oUcSw7.
  2. Sienna Kossman, "8 FAQs About EMV Credit Cards," Creditcards.com, http://bit.ly/1jtE51p.
  3. Herb Weisbaum, "One Year On, Are Chip Cards Effective—Or Just Very Annoying?" NBC News, Oct. 10, 2016, http://nbcnews.to/2dLjXsi.
  4. Ibid.
  5. QuickBooks, "EMV Costs, Certifications and More: What You Need to Know Before the Migration," http://intuit.me/2onJMEW.
  6. Weisbaum, "One Year On, Are Chip Cards Effective—Or Just Very Annoying?" see reference 3.
  7. Maggie Overfelt, "Hackers Rush to Cash in on $14 Billion in Fraud Before Chip Cards Take Over," cnbc.com, May 6, 2016, http://cnb.cx/1O488f2.
  8. Jeff Bukhari, "That Chip on Your Credit Card Isn’t Stopping Fraud After All," Fortune.com, Feb. 1, 2017, http://for.tn/2kAAOSF.
  9. Weisbaum, "One Year On, Are Chip Cards Effective—Or Just Very Annoying?" see reference 3.
  10. Overfelt, "Hackers Rush to Cash in on $14 Billion in Fraud Before Chip Cards Take Over," see reference 7.
  11. Ethan Wolff-Mann, "Square’s Chip Credit Card Readers Just Got 14% Faster," Yahoo Finance, March 24, 2017, https://yhoo.it/2n1TCsp.
  12. Overfelt, "Hackers Rush to Cash in on $14 Billion in Fraud Before Chip Cards Take Over," see reference 7.
  13. Ibid.
  14. Ibid.

Tune In

ASQTV’s latest episode examines a new approach to five whys and root cause analysis, and gives a refresher on "is/is not" analysis. Visit http://videos.asq.org to access the full video library.

Fall Conferences Set

The American Statistical Association will host its Symposium on Statistical Inference Oct. 11 in Bethesda, MD. For more information, visit https://ww2.amstat.org/meetings/ssi/2017.

The Association for Manufacturing Excellence’s lean and continuous improvement conference will take place Oct. 9-13 in Boston. Visit www.ame.org/boston for more details.

The Institute of Electrical and Electronics Engineers fourth annual international conference on data science and advanced analytics will be Oct. 19-21 in Tokyo. For more information, visit www.dslab.it.aoyama.ac.jp/dsaa2017.

ACG-ANAB Unveil Plans

The Allergan Control Group Inc. (ACG) has announced requirements for ACG-recognized certification bodies (CB) to transition to ANAB accreditation. This is in keeping with the previously announced plan to separate ACG as the Gluten-Free Certification Program (GFCP) standard owner from the accreditation of CBs in the program. For more information, visit http://tinyurl.com/acg-anab-accredit.

New Secretary-General Named

The International Organization for Standardization (ISO) has appointed Sergio Mujica as its new secretary-general, effective in July. Mujica has been the deputy secretary-general of the World Customs Organization for the last seven years.

For more information, visit www.iso.org/news/Ref2176.html (case sensitive).

ISO/IEC 80000 Under Review

The ISO/IEC 80000 quantities and units series of standards is currently under revision. The series consists of 13 different parts, featuring 11 from the International Organization for Standardization (ISO) and two from the International Electrotechnical Commission (IEC). Some of these standards are approaching a crucial and final stage of their revision. For more information, visit http://tinyurl.com/iso-iec-standards.

QMD Studies Organizational Excellence

Member participation encouraged

ASQ’s Quality Management Division is researching the current state of organizational excellence and is asking ASQ members to provide feedback.

The study is being conducted by the division’s organizational excellence technical committee and Dawn Ringrose of Organizational Excellence Specialists, who is using an integrated excellence model and automated assessment and reporting tool. The research is endorsed by the Global Benchmarking Network and International Organization for Standardization technical committee 176.

ASQ members can participate in an abbreviated assessment (http://tinyurl.com/org-assess-teaser) or full assessment (http://tinyurl.com/org-assess-full). Individual results will remain confidential and only aggregate results will be shared at www.linkedin.com/groups/4369749.

Respondents can download a copy of the integrated model in English and Spanish at http://organizationalexcellencespecialists.ca.

Patient Advocacy Groups Merge

The Institute for Healthcare Improvement and the National Patient Safety Foundation will merge this month. The two patient advocacy organizations together will continue to raise awareness about safety issues and educate the healthcare workforce about best practices. For more information, visit www.npsf.org/news/333839/institute-for-healthcare-improvement-and-npsf-agree-to-merger.htm.

Getting to Know…

Charles C. Roberts

Current position: U.S. Air Force lead metrology laboratory evaluator.

Education: Bachelor’s degree in business quality management from Southwestern College in Winfield, KS.

What was your introduction to quality? As a calibration technician, I was introduced through the quality programs located at all U.S. Air Force metrology labs. The programs have developed over the years, but the principles of process improvement have always remained at the forefront.

Previous note-worthy jobs? Throughout my 20-plus years in the Air Force, I held many positions such as calibration technician and supervisor, and leadership instructor.

What’s the best career advice you ever received? Success doesn’t come to the smartest person in the room, but rather the hardest- working person in the room. You create your own opportunities to grow and succeed through devotion and hard work.

Outside activities? I’m a member of the evaluation team at the U.S. Air Force Metrology and Calibration Center in Heath, OH. I also serve as a lead evaluator, leading small teams and training the evaluation cadre while aligning inspections with the inspector general construct.

Any recent honors or awards? I received the ASQ Inspection Division’s Chuck Carter Inspector of the Year Award.

What were the last books your read? Gemba Kaizen (McGraw-Hill, 1997) by Masaaki Imai, and Genghis: Birth of an Empire (Delacorte Press, 2007) by Conn Iggulden. My favorite authors are Iggulden and Stephen King.

Have you ever written an article? "Chasing the Checklist," Quality magazine, March 2016.

Are you active in ASQ? I am the voice of the customer chair for ASQ’s Measurement Quality Division and served as a judge for ASQ’s International Team Excellence Award.

Do you have a mentor? Early in my career in the military, my first two supervisors—Billy Potts and Mickie Green—helped me to be successful and develop work habits that are still with me today. More recently, Cheree Lewis has helped me to maintain my motivation and make small adjustments as new opportunities have presented themselves.

Personal: I have a wife, Carolyn, and three children: two sons, 17 and 18, and a daughter, 16.

What do you do for fun? Reading and watching TV, including sports, "The Big Bang Theory" and "Game of Thrones."

Quality quote: Don’t strive for perfection, but strive for improvement. Many small steps will take you much farther than a leap.

New @ ASQ

AWARD ANNOUNCED Shawn Armstrong was named this year’s recipient of ASQ’s Customer-Supplier Division’s Charles E. Meadows Award, which recognizes individuals who have demonstrated outstanding service to the customer-supplier field.

NOMINATIONS SOUGHT ASQ’s Statistics Division is now accepting nominations for this year’s William G. Hunter Award. The award, named for the division’s founding chair, recognizes outstanding leaders in the field of applied statistics. Deadline to submit nominations is June 30. For more information, visit http://asq.org/statistics/about/william-g-hunter-award.

WEBINAR PLANNED The ASQ Reliability Division is hosting a webinar on the design and analysis of experiments in Minitab. The webinar takes place 11 a.m. CDT May 11. For more information and to register, visit www.asqrd.org/webinars/203.

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