Bamboozled: December 10, 2015

calcThe holiday season brings most retailers their biggest sales numbers of the year.

It’s also a time that brings out plenty of scammers.

To combat fraud, U.S. card issuers made some big changes, moving to so-called “chip cards.” These credit cards use a technology called EMV — Europay, MasterCard and Visa — which changes how credit cards are processed in stores. Instead of swiping a card, merchants insert the card into a reader, which creates a one-time transaction code.

If that code is stolen by hackers, it won’t be worth anything because it was only good for that one transaction.

The problem?

Most merchants have the equipment to read the new cards, but most aren’t using it, according to a new survey by ConsumerWorld.org.

That means if you use credit cards for holiday purchases, you’ll still be doing a lot of swiping, so the extra fraud protection provided by chip cards isn’t being used by those retailers.

The ConsumerWorld.org survey looked at nearly 50 national and regional retailers, and it found three-quarters of them have not enabled the technology chain-wide.

That means a large majority of retailers have not complied with an Oct. 1 deadline set by card issuers. After that date, most retailers would be financially responsible for any fraud losses if they didn’t use the new system.

The study found that of the 48 chains surveyed, all but Radio Shack had the payment system equipment.

Those who have the systems but aren’t using them include: Sears, Kmart, Costco, Michael’s, Toys ‘R’ Us, Bed Bath & Beyond, T.J. Maxx, Marshalls, Sports Authority, Foot Locker, Whole Foods, Stop & Shop, Petsmart, Kohl’s, Staples, Safeway, Kroger and CVS.

Of those, CVS said it planned to have the system enabled chain-wide by the end of the year. The other stores didn’t say when the system would be in place.

Retailers who have completely integrated the system are Target, Walgreens, Home Depot, Rite Aid, Macy’s, Best Buy, Walmart and Sam’s Club.

Lowe’s, Old Navy and Office Depot/Max had the systems enabled at stores visited in person by ConsumerWorld.org, but the parent companies didn’t respond to the survey.

Many stores have said that it’s not easy to get the new systems to work properly.

“I understand that the process is very time consuming, complex and expensive, but according to MasterCard, stores were given three-and-a-half years advance notice,” said ConsumerWorld.org founder Edgar Dworsky. .

And retailers certainly don’t want to have a problem processing credit card payments during the busy holiday season, which has led to implementation delays by some retailers, the study found.

Even though consumers were deluged this fall with new credit and debit cards that have the new chip, this delay may not be such a big deal to individual consumers.

“With the major credit cards, shoppers have zero liability for fraud — not even the $50 maximum specified in federal law,” Dworsky said. “If a counterfeit card is used with the consumer’s number, and if the merchant has not yet turned on their chip card readers, it will be responsible for fraud.”

For that reason, in Bamboozled’s humble opinion, the chip cards are really a protection against fraud for the credit card issuer — not the consumer.

Of course, increased fraud, even if it’s not paid for by the individual victims, will still cost consumers as lenders raise fees to cover growing fraud losses.

And because of all the hullaballoo about the new card readers, when a card is swiped, some consumers are confused about why.

Now you know why.

There’s also the convenience issue.

Consumers and retailers both have complained that processing a chip card transaction takes longer than the swipe method.

Some consumers aren’t loving the new card readers, according to a November study by payment industry research company Mercator Advisory Group.

The study found that 28 percent of U.S. consumers who have chip cards are bothered by them, consider them confusing, or try to avoid stores that force them to “dip their chip card rather than swipe it.”

But consumers will just have to get used to it — eventually.

In the meantime, remember Bamboozled’s warning to watch out for fake notices from lenders about the new chip cards.

Have you had a problem using a chip card? Do you love them or hate them? Let us know in the comments section below.

Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com. Stay informed and sign up for NJMoneyHelp.com’s weekly e-newsletter.