Credit And Debit Card Fraud Case Study

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Why is the United States not up to date with Europe in issuing safer credit and debit card transactions? Europe has had the chip and pin credit and debit cards since the year 2004. These new security chip cards started to become a trend in the year 2014 in the United States. The United States has over ten million credit card terminals so it was hard to get such a large market to adopt to a new type of technology. There are three sectors of the market that had to work together which were the retailers, big financial institutions, and then the card associations like Visa or MasterCard. Retailers and credit card companies could never decide who would pay the transaction fees so there was another conflict that slowed the process of implementing…show more content…
Most consumers don’t know that they aren’t liable for any unauthorized transactions made with their own credit cards. During the year 2014, credit and debit card fraud resulted in losses up to $16.31 billion. Card issuers bore a share of sixty-two percent of losses due to fraud; where merchants have the other thirty-eight percent of the liability. Losses that occur with the card issuer are usually at the point of sale, and this is due to counterfeit cards. Losses that occur with the merchant usually only occur in a card not present transaction such as online or over the phone. In 2014, the United States had 48.2% of card fraud losses worldwide. Retailers encounter $580.5 million in debit card fraud losses. They in return spend $6.47 billion on credit and debit card prevention, but there is more that could be done. In 2011, statistics show that eighty-five percent of all fraud with debit cards involved a signature verification. Of the $1.35 billion in debit card fraud losses, $1.15 billion included debit card transactions using a signature (Kiernan). These debit and credit card frauds amount to a lot of money for the banks and the retailers, but maybe paying an extra amount towards prevention would be worth it for…show more content…
It makes it a lot harder for criminals to steal your information and exploit retailer’s payment systems, but this is only in certain cases. There is no protection against card not present fraud or having your card lost or stolen. Retailers are spending billions of dollars upgrading their payment terminals only really to help fraud against banks not really the people themselves. A lot of retailers still don’t have their payment terminals up to date so in those places, the cards containing the security chip are useless. Banks are spending all of this money to implement this new feature into their credit and debit cards, and a lot of the stores don’t even have their systems updated to use the card the way it’s meant to be used. Most chip cards do require a signature but only for certain amounts, but the problem with that is that there is no legitimate way to verify a signature made by that person at that time. Anyone could use your card the intended way, and then just sign for it, and that company would have no way of knowing if that is your card. It would be more efficient to have a pin number with every chip card, and the legitimate way of knowing that card belongs to you is by typing in your pin number. So instead of having chip and signature, they should create pin numbers for every card for every transaction no matter how much
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