Chip and Pin not so foolproof

| October 9, 2007 | 0 Comments

Banks and building societies claim that Chip and Pin is foolproof but a flaw has been revealed. A large amount of cash withdrawals are being made using cards that don’t contain a security chip.

The Chip and Pin system was fully rolled out in February 2006 promising that it would significantly cut bank fraud which it has. However, it has increasingly been used to push the liability for fraud back on to the customer.

There are over 140 million cards in circulation and more than 7 million withdrawals take place each day at cash machines across the UK. If every card with a slight fault in its chip was rejected everyday, banks would be flooded with complaints from irate customers.

This means fraudsters using cloned bank cards that have no chip can still obtain other people’s cash despite the industry stating that the system is totally safe.

The banking industry trade association for payments, Apacs, has confirmed that an undisclosed number of the UK’s 60,500 cash machines will allow cloned cards to withdraw money as long as they are used with the correct Pin number. Obtaining someone’s Pin can be easily done by standing behind them in a shop and watching them enter their Pin.

However, banks are refusing to compensate victims of fraud because they say the customer’s own card must have been used and the customer must be at fault. The bank actually implies that the customer is lying.

A spokesperson for Apacs said you can’t ensure that a chip is working 100% of the time and banks don’t want to irritate customers by keeping the card. Banks have been known to say that chip and Pin is 100% safe but it isn’t.

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