After Target hack, should you use your credit card less?
January 21, 2014
Like many consumers, I’ve switched to using my credit card for most purchases. It’s usually faster than writing a check, and I accumulate reward points for airline flights.
So, in light of the recent massive hacking of Target and other retailers, what should consumers do about using their credit cards?
I wrote an article with tips from the Washington state attorney general after the Target hacking. The advice is to watch out for “Phishing” emails, don’t give out personal information, and check your credit card accounts for unauthorized charges regularly.
However, an article in Tuesday’s Washington Post is disturbing. It said that U.S. banks and retailers are decades behind in offering a more secure system that would eliminate most common types of fraud.
The more advanced cards have a computer chip and security systems that keep consumers’ account numbers and other information invisible.
However, the article said that it could take years for the argument to be settled over who will pay for the $8 billions to install the new systems. It also said that the United States is being targeted because of the weakness of its systems following Europe’s upgrade to use of computer chips in credit cards.
So, what should consumers do now?
Contact your bank, credit union, and members of Congress to tell them you want more secure credit card systems.
In the meantime, use credit cards less?
Ed Mierzwinski, consumer program director for U.S. PIRG said he’s not afraid to use his credit card anywhere because the law protects you.
However, Mierzwinski said debit cards are less safe.
“Not only is the law weak – "zero liability" is a promise, not a law – but it's your own money you've got to wait for the bank to give back if you are a fraud victim,” he said. Meanwhile, you have cash flow problems and bounced checks.
Mierzwinski said the chip and PIN system is being implemented. Some merchants will follow the bank timetable and be the first to offer it if they’re clever.
But, he said, chip and PIN only works at retail stores, not online. And, he wonders, how long before hackers figure out how to break in?
“The real solution is to improve consumer liability rules for all cards, so both merchants and banks have a greater incentive to implement even better technology and comply with security standards,” Mierzwinski said on his blog. “The banks are trying to blame this all on Target, but Visa and MasterCard have placed the obsolete tech in everyone's wallets.”
For consumers who don't qualify for credit cards and must use debit cards, he recommends setting up a personal firewall. Here’s how:
Open a bank account at a separate bank for your debit card. Don't link that limited amount of money to your main savings and checking accounts in a different bank.
Good luck to us all. And, be sure to follow the tips at the beginning of this article, especially checking your account statements regularly.
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