Have you heard about the credit card scam that’s completely legal?
In recent months, almost all consumers have been issued new credit and debit cards with a chip installed to prevent fraud.
Well, quite frankly, this is just another scam introduced by merchant services companies to sell more new equipment to businesses to maintain compliance with a system that really isn’t bulletproof against fraud prevention.
If you use your new card at a business, and you don’t remember your PIN, you can still process your transaction – even with the chip reader option.
So, someone could steal your credit or debit card, not knowing your PIN, and still make purchases at a business that may have done everything required by their merchant services provider to satisfy compliance. Of course, they may take the liberty of questioning a buyer to show their ID (such as a driver’s license), but how often does that happen?
For businesses, merchant services providers are a financial nuisance. Most business owners would prefer payments from customers be made with cash or check, because credit or debit card payment processing results in the business losing a portion of the revenue generated from the sale – which goes directly to the merchant services provider.
And, the fees don’t stop there for businesses. With most merchant service providers, they charge a monthly base fee just for providing the service. The reality is that all of these additional fees increase the cost of doing business for local businesses, and they can only absorb those expenses by increasing their prices to customers. So, in the end, the front-end consumer always pays for these “nickel and dime” charges one way or another.
A couple of years ago, the Fillmore County Journal maintained a contractual relationship with The Redwoods Company. In August 2015, that company was bought out by another larger merchant services provider that immediately increased monthly base fees by 800%. That’s not a typo – 800%!
And, as a result, we ended our contract with that company as swiftly as possible. For any small business in our small communities, business owners and managers have to constantly pay attention to their bills and notices from vendors. That’s why I refuse to pay our company bills online, as is often offered by the vast majority of companies. When I pay a bill with a check, I pay more attention to what I am paying for as I review the bill and prepare the check to send in the mail. It may seem archaic to some people, but I think it helps keep a person more alert to their finances.
So, back to the chip reader credit/debit card scam. The one way to prevent or reduce the risk of fraud with the chip reader is to require cardholders to enter their PIN with every transaction at every point of purchase. But, even then, there is still the risk of fraud if some would-be thief somehow obtains your PIN.
In conclusion, the only way to truly put the kibosh on fraudulent credit or debit card transactions is to require thumb or fingerprint recognition, or eye retina recognition with every recognition. I’m not sure how that would work with online purchases, but I’m sure somebody smarter than myself could figure that out. With this type of payment verification process, if someone really wanted to commit fraud, they’d have to get their hands on your thumb or eyeball – a little more challenging to steal than a piece of plastic and a PIN.
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