February 27, 2024

Bucks: E.M.V. Credit Cards Unlikely to Change Consumer Liability

Recently, Bucks noted Visa’s plans to speed up adoption in the United States of credit and debit cards that use E.M.V. chip technology, which is considered more secure than the old-fashioned magnetic strip cards prevalent here. The new cards are widespread in Europe, and some globetrotting Americans have complained that their cards don’t always work  overseas.

In response, a reader wondered, in a posted comment, if the impetus for the change was to shift more liability for card fraud away from banks and onto cardholders; he suggested that had happened in Europe, after the migration to E.M.V. cards several years ago. (E.M.V. stands for Europay, MasterCard and Visa.)

But it’s unlikely that the new chip cards will result in any changes to consumer liability in the United States, says Julie McNelley, an analyst specializing in retail banking with Aite Group.  Federal law already limits consumer liability in cases of card fraud to a maximum of $50 in most situations, and banks usually waive even that amount.  “The shift of the form factor isn’t going to affect consumer liability,” Ms. McNelley said.

Rosetta Jones, a spokeswoman for Visa, noted in an e-mail that Visa has a “zero liability” policy for fraudulent use of its credit and debit cards that goes beyond the protection of federal law in the United States: “Visa doesn’t expect the zero liability protections consumers enjoy in the U.S. to change with the adoption of E.M.V. chip.”

There was some controversy about cardholder liability in Britain, when some banks balked at reimbursing customers for unauthorized transactions conducted using a PIN, according to consumer advocates in Britain.

But that problem was addressed by regulations that took effect in late 2009. A spokeswoman for the UK Card Association, an industry group, said via e-mail that cardholder liability is limited by legislation to £50 (about $80) and in practice, most card companies refund their customers in full. There is a possible exception if the cardholder acts “fraudulently” or with “gross negligence,” but the burden of proof lies with the bank.

What will change in the United States, eventually, is that merchants — instead of banks — will bear more responsibility for fraudulent transactions. Card-issuing banks now generally cover most fraud costs, but merchants will bear more liability if they don’t adopt payment systems that can handle the new E.M.V. technology by October 2015, according to Visa’s plan.

Article source: http://feeds.nytimes.com/click.phdo?i=45e1fb41cdc0373df7900eb714b566aa

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