Fred D. Zemel
Partner
201-896-7065 fzemel@sh-law.comFirm Insights
Will Chip-and-PIN Credit Cards Become a Reality for U.S. Consumers?
Author: Fred D. Zemel
Date: November 5, 2014
Key Contacts
Back
Technology exists that makes credit cards much less vulnerable to fraud. However, it is still not available in the United States. The new system is known as “chip-and-PIN.” As the name suggests, it improves security by inserting a tiny chip into the card, which must be activated by a personal identification number (PIN) when scanned at the point-of-purchase. The current magnetic strip system only requires a user signature and is more readily cloned by criminals.
Card issuers and retailers in Europe have embraced chip-and-PIN technology. According to statistics from the United Kingdom Payments Administration, total losses from in-store credit card fraud decreased from 218.8 million pounds ($356.5 million) in 2004 to 98.5 million pounds ($160.5 million) in 2008. Removing the signature requirement also reduces costs for retailers.
Adoption is moving slowly in the United States, in large part because one of the primary advantages for credit card companies cannot be realized under U.S. law. In the UK, consumers are held accountable if their pin number is used to complete a disputed transaction, while the merchant holds responsibility otherwise. In this country, such liability shifts are precluded under Electronic Fund Transfer Act of 1978 and Regulation E. Many retailers are also not eager to make the switch because it requires them to purchase all new equipment.
President Obama recently took executive action to spur the adoption of chip-and-PIN technology. Under the BuySecure Initiative, chip-and-PIN cards will become the standard for federal government programs. Federal agencies that process consumer sales will also replace card terminals with those with new chip and PIN security features. President Obama also announced that several leading retailers, including Home Depot, Target, Walgreens, and Walmart, would be rolling out secure chip and PIN-compatible card terminals in 2015.
“The idea that somebody halfway around the world could run up thousands of dollars in charges in your name just because they stole your number, or because you swiped your card at the wrong place in the wrong time, that’s infuriating,” Obama said.
It will be interesting to see how the executive action impacts the stalemate on credit card security. California recently attempted to enact legislation that would require larger retailers and credit card issuers to implement the new payment system. However, the bill died in committee after facing stiff opposition from the tech and banking industries.
If you have questions about this post or would like to discuss how new credit card security laws may impact your business, please the Scarinci Hollenbeck attorney with whom you work.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Will Chip-and-PIN Credit Cards Become a Reality for U.S. Consumers?
Author: Fred D. Zemel
Technology exists that makes credit cards much less vulnerable to fraud. However, it is still not available in the United States. The new system is known as “chip-and-PIN.” As the name suggests, it improves security by inserting a tiny chip into the card, which must be activated by a personal identification number (PIN) when scanned at the point-of-purchase. The current magnetic strip system only requires a user signature and is more readily cloned by criminals.
Card issuers and retailers in Europe have embraced chip-and-PIN technology. According to statistics from the United Kingdom Payments Administration, total losses from in-store credit card fraud decreased from 218.8 million pounds ($356.5 million) in 2004 to 98.5 million pounds ($160.5 million) in 2008. Removing the signature requirement also reduces costs for retailers.
Adoption is moving slowly in the United States, in large part because one of the primary advantages for credit card companies cannot be realized under U.S. law. In the UK, consumers are held accountable if their pin number is used to complete a disputed transaction, while the merchant holds responsibility otherwise. In this country, such liability shifts are precluded under Electronic Fund Transfer Act of 1978 and Regulation E. Many retailers are also not eager to make the switch because it requires them to purchase all new equipment.
President Obama recently took executive action to spur the adoption of chip-and-PIN technology. Under the BuySecure Initiative, chip-and-PIN cards will become the standard for federal government programs. Federal agencies that process consumer sales will also replace card terminals with those with new chip and PIN security features. President Obama also announced that several leading retailers, including Home Depot, Target, Walgreens, and Walmart, would be rolling out secure chip and PIN-compatible card terminals in 2015.
“The idea that somebody halfway around the world could run up thousands of dollars in charges in your name just because they stole your number, or because you swiped your card at the wrong place in the wrong time, that’s infuriating,” Obama said.
It will be interesting to see how the executive action impacts the stalemate on credit card security. California recently attempted to enact legislation that would require larger retailers and credit card issuers to implement the new payment system. However, the bill died in committee after facing stiff opposition from the tech and banking industries.
If you have questions about this post or would like to discuss how new credit card security laws may impact your business, please the Scarinci Hollenbeck attorney with whom you work.