The Tarheel Pipeline, Fall 2015

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Fall 2015 17
feature
To encourage use of chip cards, Visa and MasterCard plan to install
a “Fraud Liability Shift” on October 1st when dealing with swiped
transactions that turn out to be fraudulent.
In simple terms:
• IF you swipe a card at your Business Office, and
• IF that card has a chip, and
• IF you do not read the chip on the card, and
• IF that specific transaction turns out to be fraudulent,
• Then you will take the loss on that fraudulent payment.
(Did you catch all those IFs?)
What is Your Risk of Loss?
Frankly, who takes the loss on fraud now? Not the Customer. Isn’t it
already landing on your Business Office now? Yes. And when it does,
what happens? You put the amount back on the customer’s account, add
a late fee, and go after them.
Let’s look at all those IFs above and calculate a sample utility office’s
risk of loss.
• 3,000 card-payers a month, paying an average of $50.
• Swiping 5% of its total card payments (the rest are mail, phone, online).
• Only 40% of these swiped card payments have a chip on them.
• Assume card payment fraud of 1/10th of a percent.
• Resulting total risk: $3.00 a month for all 3,000 payments. Not each – total.
So why fool with chip cards?
The answer: Visa and MasterCard want you to. They control the rules
related to cards. And, over many years, magnetic swipe stripes may go
away. Do you need to stress about this today? Likely not. But over time,
as all cards begin to have chips? Yes. You will want to change from
swiping to chip-reading.
Beware the Scammers!
If you have read this far, you know more about this now than most
people who profess to be in my business of credit and debit card payment
processing. No kidding. Telemarketing houses have been calling utilities
for months to scare them with “EMV fraud liability shift” warnings that
will surely cause them “huge losses after October 1st.” Walk-in salesmen
deliver the same line. “YouMUST act now (and buy what they are selling)
to solve this problem… or you will surely lose your money and your job.”
Slick-talking salesmen aren’t the only ones looking to scare you. Criminals
are in on it, too, trying to get your personal and business information
using these same tactics. It works. Don’t be scammed. Be suspicious.
Recap
• Swiping of magnetic stripes on cards should still be allowed for years to come.
• Credit and debit card fraud as you know it today will likely stay at the same levels.
• Your Business Office will want to move from swiping to chip-reading over time.
• Today’s chip-card issue does not relate to mail, phone, or online payments.
Account Takeover – the Next Trend
In my service on the Board of the Better Business Bureau, I am seeing the
up and coming way for bad guys to steal – TheAccount Takeover. The bad
guys call you to get information on a customer. They look in your office
trash for customer info. They steal from customers’ trash and their email.
They look up customer info on social media. Then, they will come to you
with real Customer info and open new accounts – with a real person’s real
info – to steal from your Business Office. They will open bank accounts
and credit cards, too. It will be a real mess for the victims. Identity Fraud –
Reinvented. Life is short, so enjoy it by staying safe. And be vigilant.
Robert Mohon is a Senior Payment Specialist
with The Neil Group LLC, helping NCRWA
Members accept credit and debit card payments
for low cost – or free. He serves on the Board of
Directors of the Better Business Bureau and has
20 years’ experience in the payment processing
industry. Learn more at
and This
article is for educational purposes only and is
not designed to render legal, accounting, or
other professional advice.