Credit card fraud perpetrated upon US Credit Card holders stands at 47% of the world’s credit and debit card fraud according to the highly respected Nilson Report. That high statistic translates into a mind-boggling 3.56 billion dollars of fraud losses in the United States last year.

Why, in one of the world’s leading industrial countries, is this loss so great? And what can American cardholders do to protect themselves?

The amount of fraud loss in the US is not directly proportional to the amount of credit card spending; although we are definitely a nation of consumers, we only generate 27% of purchases and cash.

Nilson Report Publisher, David Robertson, states there are two reasons card fraud is so high in the United States. “U.S. banks have been slow to adopt newer technologies such as EMV chip cards, and issuers are reluctant to decline card authorization from merchants because they don’t want to alienate their cardholder.”

EMV technology is widely used in Europe and other parts of the world and provides more protection to the card holder. Cards with EMV technology have a chip embedded that is essentially a microprocessor, a small type of computer. These chips can store more information that the magnetic strip on the back of cards issued by US banks and they also have stronger security.

Cards with magnetic strips can easily be skimmed with a handheld, portable device as was done in the recently discovered NYC restaurants credit card fraud ring. The stolen information can then be placed on another magnetic strip to create a fraudulent card. With a using the EMV chip, built in cryptographic algorithms that change with each use are present so it is not possible to skim the card and use the information gleaned for online purchases. EMV cards also have built in data authentication that prevents fraudulent card replication. The EMV chip has PIN capability so if the card leaves the customer’s hand, gets lost, or gets stolen, the card cannot be used.

Banks in the US have obviously been slow to move toward EMV technology. Speculators assume the reasons why US banks have dragged their feet could involve the expense of the change both for the card issuers and also for the retailers accepting credit cards as current card readers would all have to be replaced. However, some speculation has also pointed in the same direction as Robertson’s second assertion, that card issuers are hesitant to alienate their customers.

Driven by the need or desire to satisfy stock holders and increase the profit margin and very aware of America’s free market system allowing competition, card issuers seek to keep their customers happy so the customer will continue to use that issuer’s credit card. The Nilson Report states that the average American carries at least 4 credit cards. This means that not only if a card issuer tightens up on purchase approvals, but also if the card issuer moves to a new technology and retailers are slow to upgrade their equipment, cardholders may too readily resort to using a competitor’s card because it is more convenient even if it is also more at risk for potential fraud.

As consumers, we can help bring about change to a more secure technology if we voice our opinions both to our card issuers and to the merchants with whom we regularly do business. Let your credit card issuer know that you support being on the cutting edge with a move to EMV technology. LIkewise, communicate with store owners or managers that you would support a changeover to equipment allowing use of EMV chip cards. Both want your business, and if enough people voice their opinions, change will happen.

In the meantime, consumers can take steps to protect themselves from credit card fraud by doing the following:

• Keep a hard copy of all credit card information.
• Use credit cards, not cash or debit cards.
• Limit the number of credit cards you carry.
• Use only one credit card for making online purchases.
• When making purchases with a credit card, never let the card leave your sight.
• Inspect ATM’s, gas pumps, and other machines designed to scan your card before completing a transaction.