Chip & Spin (Published 21/10/05)

We keep hearing all about ‘Chip & Pin’ nowadays. We are not going to sign when we use our plastic cards any more, we have to enter a pin number.

According to the credit companies, this is going to reduce the cost of fraud. However, what they do not tell you is that the way they are going to do this is by sending the bill to the customer rather than paying it themselves. I think this is so obvious I am amazed that they have got away with it, but that just shows the power of modern slick marketing and pr.

Imagine the scenario: you are paying for something with your plastic, and there is a fraudster lurking around. At the moment he has to get hold of your card and forge your signature. But not any more. Now all he has to do is get hold of your card and remember your pin number. Which is easier? Daft question really.

So what's all the fuss about? Well, if he forges your signature that's not your fault, the credit company has to stand the loss. But if he knows your pin number that is your fault. You must have been careless, so it’s your fault you will have to pay. The fact that he was peering over your shoulder without you noticing (in fact the whole point of fraudsters is that they do what they do on the sly) will cut no ice. You were not careful enough. It’s all your fault.

I had occasion to look into this a while ago for a client, and discovered that you can in fact opt out of chip and pin and continue with a signature. This is a regulatory requirement, designed for people who can't punch buttons because of disability or whatever. But the practice appears to be that if you ask no-one at the credit company knows anything about it, so persistence is the order of the day.