A new study from Javelin Strategy and Research found that identity fraud cases rose 16 percent in 2016, to reach record-high levels of 15.4 million incidences in America for the year. Four major credit card companies (MasterCard, American Express, Visa, and Discover) began to roll out chip technology in October 2015, announcing that chip cards were more difficult to defraud and clone.
Lane Conner, CEO of credit card technology firm Fuze, argued that there is nothing wrong with the chip technology, it is the rollout that was bungled.
"The real security was supposed to be the pin and actually putting your pin in when you actually dip the card," he said. "A bad guy could just as easily steal your wallet, go and dip a credit card into a machine and sign for it like they're you as you could swiping a card."
Conner pointed out that ecommerce, which is growing exponentially annually but provides little-to-no security for consumers, is also to blame for the increase in identity theft. These cases are known as Card Not Present (CNP) fraud because the physical card is not involved in the online transaction. Incidents of CNP fraud rose 40 percent in 2016.
The Javelin study also said that "account takeovers," in which thieves steal someone's identity to get access to that person's bank account, rose 61 percent in 2016. Credit card fraud and cloning has been drastically reduced by the use of chip technology, and as a result hackers have switched tactics.
"Criminals are getting much better at committing fraud online," said Al Pascual, research director and head of fraud and security at Javelin, in a statement. "Their skill sets are improving and the tools that they're using are much more sophisticated."
There is a silver lining to the explosion of credit card theft, as detection and response from credit card companies is improving just as quickly. "Identity fraud continues to grow, but at the same time we're catching these incidents earlier and more frequently," said Stephen Coggeshall, chief analytics and science officer at security firm Lifelock.
"So even though the attempts continue to grow, the technology is working and the dollar loss per attack is going down."
The microchip in a credit or debit card automatically encrypts the personal data on the card after scanning. The technology has been celebrated by security experts, but some consumers have mentioned that a transaction takes significantly longer than the old-school swipe.
