Smart Cards Could Have Protected Target Shoppers From Identity Thieves


credit-cardsAfter thieves hijacked credit and debit card data belonging to 40 million Target shoppers, many blamed the retail giant for putting them at risk of identity theft.

But some experts are also pointing to a less visible culprit: the credit card industry. Card issuers might not have been able to prevent the recent data breach at Target, but if they had upgraded to more secure technology, they could have deterred thieves from using that stolen information to make counterfeit credit cards.

U.S. banks rely on credit cards with magnetic strips, which can be easily reproduced by thieves, while European banks have issued millions of more modern “smart cards” that are embedded with computer chips. Smart cards encrypt transaction information, require thieves to know the cardholder’s PIN, and can generate one-time-only passwords.

Smart cards would not eliminate credit card fraud entirely. The technology can stop criminals from using stolen credit cards in checkout lines, but it would not prevent thieves from using cards online, where people type their credit card numbers to make purchases.

But if U.S. banks issued smart cards, “you would stamp out counterfeit cards,” said David Robertson, publisher of The Nilson Report, a credit card industry trade publication.

Read more at the HUFFINGTON POST.

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