It’s become a familiar scenario in America: you grab some essentials at the drugstore, stand in a long line, and then, once you finally get to the register, pull out your credit card, preparing to swipe, and you see those three terrible words: Please insert card.
Chip cards, increasingly ubiquitous, use a microchip instead of the familiar magnetic strip. That chip stores information about the card holder and generates a one-time use code for the purchase. Combined with a PIN code, this system is more secure than the time-honored method of simply swiping, and it’s already been in use in several other countries for several years now. To the customer, however, the only outward effect is that you have to wait longer time. The people behind the register don’t seem to be fans, either: Several businesses large and small are suing the credit card companies forcing the chip reader rollout.
Walmart, Kroger, and Home Depot have sued Visa and Mastercard (just Visa, in Walmart and Kroger’s cases) because they have yet to follow through with the the PIN part of the “chip and PIN” system. That is, customers insert their cards into a chip reader, and then sign the receipt to confirm their purchases rather than entering a PIN. Not only are signatures easier to fake (and cashiers aren’t exactly trained signature forgery detection artists), the lawsuits say, but the credit card companies charge higher fees on signature transactions than they do PIN transactions. Some stores tried to forbid debit-using customers from using signatures instead of PINs, only to be told that they had to allow signatures and risked being fined and even cut off from being able to accept those cards if they didn’t. As for the credit cards, most of those don’t even have PINs yet, so the signature is the only option. Those suits are all still winding their way through courts.
Now they’ve been joined by yet another one. Last week, a federal judge ruled that an antitrust lawsuit against Visa, MasterCard, American Express and Discover may proceed. This suit, filed in March by two Florida supermarket and liquor businesses as a class action suit, concerns the shift in liability for fraudulent charges.
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