Bamboozled: November 5, 2015

??????????????????New smart-chip credit and debit cards are supposed to reduce fraud, and they probably will.

But that’s not stopping scammers from trying to take advantage of this time — right now — to use the cards for ill-gotten gains.

When a lender sends you a new card, your account has always been at risk as the card travels from the lender to your mailbox and into your hands.

Cards can be stolen and fraudulently activated, for example.

But right now, there’s a lot of confusion about these cards, and millions have been in the mail system in the past few weeks.

It’s an opportunity for crooks, and not just for the ones who steal a card out of your mailbox.

First, the skinny on the new cards.

chipU.S. card issuers have moved to this new technology, called EMV, short for Europay, MasterCard and Visa. It puts a computer chip in your credit or debit card. The chip is the small metallic square on the new cards.

When a consumer uses the new card, a unique, one-time transaction code is generated. If this code is stolen in a data hack, it won’t matter because it’s only good for one use. That’s different from the magnetic strips on older cards, because that data, once stolen, can be replicated and reused over and over.

We’re in something of a transition period for the new cards. While you need a new card, merchants need new technology to process transactions with the smart chip. You may have seen these machines at your local retailers. You no longer swipe your card, but instead insert the card into the machine so the chip can be read.

Not all merchants have the new machines, though, so you still might be swiping here and there.

Major credit card issuers had set an Oct. 1 deadline for merchants to have the new card reader machines. Those who don’t comply on time would face greater liability in a fraud case, such as if consumer data is stolen or if someone makes a purchase with a counterfeit — fake — card.

Gas stations that use pay-at-the-pump systems have until 2017 to comply.

SO WHERE’S THE FRAUD?

If the new smart-chip technology will do a better job to protect consumer information, or at least make sure any information stolen by hackers is worthless, where is the fraud risk when getting the new cards?

It may be nothing.

But card issuers are sending new cards to consumers en masse, and it’s over the course of many weeks. Unless you see a note from your lender warning you it will soon send you a new card, you may not know it’s coming until it’s in your mailbox.

Industry group Smart Card Alliance said some 120 million Americans have already received their new credit cards, and by the end of 2015, that number will skyrocket to 600 million.

Debit cards are moving more slowly.

Only about 25 percent of debit cards will have the chip by the end of the year, another industry study said, and that number should rise to 96 percent by the end of 2017.

That means we’re going to continue to see a lot of smart-chip cards on the move in the mail. Bamboozled’s household actually received five credit cards and two debit cards over a one-week period — a potential bonanza for thieves, if they were looking.

Even if you think your mailbox is safe, and even if you’ve already received your cards, scammers will try to trick you into giving away your private information.

The Federal Trade Commission recently warned consumers of such hijinks on its web site.

It said the bad guys are emailing consumers, pretending to be the card issuer.

“The scammers claim that in order to issue a new chip card, you need to update your account by confirming some personal information or clicking on a link to continue the process,” the FTC said.

If you fall for it, you’ll be handing your personal information to someone who may use it to commit identity theft. If you click on the link, you may unknowingly install malware that will collect your personal info.

Don’t fall for it.

Your lender won’t email or call you to ask you for personal information to verify anything before sending you a new card. Just delete the email (or forward it to your bank’s fraud department) or hang up the phone.

Beware of similarly false text messages, too.

If you’re not sure if a message from your lender is legit, contact your lender using the number on the back of your credit card.

And if you haven’t received a smart-chip card yet, contact your lender to ask for a timeframe so you can be on the lookout.

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.

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