Credit card debt risk discovered in chip and pin

15/02/2010

Credit card debt could pose a risk for thousands of people due to a flaw in the chip and pin system.

The purchasing system, which replaced a signature, involves a memorised four digit code.

But a new scam was uncovered on the BBC's Newsnight programme which allows thieves to make use of the card without knowing the number.

Chip and pin, which was introduced in 2006, bought with it worries that consumers would be held accountable for any incidence of credit card fraud that occurred though their account.

This latest development could add to these fears.

The scam uses a hidden computer to control the chip on the stolen card.

When the card is put in to the machine to make a purchase, the computer chip will override the owner's pin number and allow the fraudster to make a successful purchase with any random four numbers.

Kevin Still, director of EuroDebt, commented: "These are called ‘man in the middle’ attacks because the software is tricking the terminal into thinking a cardholder’s pin has been verified, which is then printed on the receipt, which is when the blame game begins.

"The banks are being challenged to close down this vulnerability and to better investigate fraud claims made by their clients. Debt problems caused by fraud are a serious issue and can take some time to resolve."

Posted by Fiona Smith

Tags; Budgeting Advice,

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