Identity Theft Adapts around Smart Cards

Chip technology may curb in-store theft, but fraudsters are finding plenty of other ways to steal your data.

Smart chip technology in credit cards revolutionized checkout payments to the frustration of millions of customers and clerks. The new system was irritating to learn for many, but people adapted because they were assured the technology took a big step forward in identity protection. However, as it always does, identity theft adapts. Fraudsters are now evolving their techniques to work around the new tech.

So while instances of in-store theft have decreased, data shows that identity theft jumped by 16% last year. Roughly six out of every 100 consumers dealt with some form of theft last year. This was due in large part to significant jumps in two other types of theft:

Identity theft adapts to move online
  1. Card-not-present transactions. This includes any payment made where the card is not present to be inserted in a Smart Chip scanner, which includes online and mobile app transactions. There was a 40% increase in this type of theft last year
  2. Account takeovers. This is where a savvy thief changes the contact information on your account so they receive new cards and all of your alerts that you may be a victim of theft.

Another report by LowCards.com finds a new type of identity theft tool called an ATM Shimmer. The basic technology has been around previously, but it’s always been bulky and fairly easy to spot. Now the new version that targets Smart Chip cards is thin and virtually undetectable when you use an ATM.

3 ways to increase your vigilance as identity theft adapts around chip technology

#1: Don’t get complacent when shopping online

Too often people don’t change their account passwords unless the online portal requires it or a data breach occurs. Don’t wait for something bad to happen before you take steps to protect your account! Change your passwords at least once every 3 months, even if you’re not prompted to do so.

Also be smart about where and how you use your cards online. Only enter information on secure e-commerce websites. Those have a green URL address bar with a lock and the web address always starts with “https://” so you know it’s secure.

You may also want to be choosey about which card you use online. Don’t use the debit card attached to your main bank account. If possible, use a credit card or prepaid credit card that has built in fraud protection; online payment accounts like Paypal can also help you avoid identity theft, too. But if you use credit, try to use a card with a low limit that you only use for online purchases. That way, it’s easier to spot fraudulent transactions.

#2: Pay attention to your statements

This means you need to actually review your monthly statements when they come in. Especially in today’s paperless society, it’s easy to get the statement notification email and just ignore it. Instead, take the few minutes it takes to review your transactions to make sure you recognize them.

Even more important, make sure to take note of any accounts that stop notifying you. If you stop receiving emails or monthly statements from a creditor, it’s a strong sign your account was taken over. So keep track of which monthly statements come in and which ones may be missing.

#3: Don’t use shady ATMs

We’ve all done it – you’re out and in need of cash, so you hit up the closest ATM, even if it’s in a shady part of town at a less than reputable looking establishment. Going to the ATM at your financial institution isn’t always convenient, but it is the best practice.

ATM Shimmers are almost impossible to spot as a consumer. As the article we linked to explains, it’s really up to the store owners to check their machines daily to ensure that tampering hasn’t occurred. Your financial institution is much more like to do this than a random gas station attendant. Financial institutions usually also have interior ATMs with good security monitoring, so they’re less likely to be hit with this type of tech.

For more information on how to protect yourself from identity theft or address theft if it occurs, visit Consolidated Credit’s Identity Theft Protection Guide.