Could gambling using a credit card be a reality?
October 2, 2018Credit cards may soon look a bit different in the UK
October 16, 2018The magnetic strip is one of the most vulnerable parts of a credit card. That is at least partially why chip technology has been introduced that makes the magnetic strip a thing of the past. Unfortunately they are still present on cards, owing to the fact that the final liability shift with regards to EMV chip readers has not taken place. The magnetic strip has led to a spate of cloned or counterfeit credit, debit and gift cards that have cost merchants billions of dollars but that could be changing.
Brought to us by the same people who brought us the Skim Reaper, researchers at the University of Florida developed a system that can give a merchant a fighting chance when it comes to detecting a cloned or counterfeit card. The system analyzes the information on the magnetic strip to check for irregularities. Legitimate cards go through a quality control check and the information is written onto it in a uniform and consistent manner. Cloned cards use cheap coding machines and are coded by hand and feature what is called jitter on the strip.
Most of the cloned cards that are seen by merchants tend to be gift cards. A thief is able to swipe the strip to get the data and if a PIN is required they can scratch off the material covering it and steal it, replacing the material with another one. They then monitor the business the card is intended for’s website to see when it is sold and activated. Considering that most people hold onto a card for a bit that gives the thief plenty of time to clone the card and use it, leaving the gift recipient shocked when they go to use it.
Gift cards are of course a popular method of retail theft. They can be purchased using a stolen card, a legitimate card or cash making it possible to purchase one anonymously. Since it can be used in store the only danger for the thief is if they are caught using a cloned or stolen card, something that will be very difficult with a gift card.
To test the ability of the new system the researchers partnered with WalMart to test it out. The results of the test were positive with 99.3% accuracy. The technology could be easily incorporated into POS terminals and testing has also shown that it can detect cloned credit or debit cards with the same accuracy.
One would think that this would be a technology that the developers of POS terminals would jump at but few are. Why? They believe that the chip has rendered the magnetic strip obsolete and all they have to do is bide their time until it goes the way of the dodo bird and so does magnetic strip fraud. Few merchants want to go through the expense of upgrading their equipment for something that may not be in existence after 2020 or 2025 and will be willing to eat any fraud. Card manufacturers will also begin placing a chip on gift cards eventually but have balked so far as adding the chip costs $2-$3 to the card, a cost that would be passed onto the consumer so it should be no surprise that few retailers have upgraded but it will become the norm in the near future. Unfortunately this may be too late to make a real difference, especially with gift cards being a popular holiday season purchase.