'Shoulder-surfing' chip and PIN fraud fear dismissed

Fraud fears over the new chip and PIN credit and debit cards have been dismissed by APACS, the card payment body behind the programme.

Over the last year banks and retailers have been replacing customers' existing magnetic strip credit and debit cards with new chipped cards and point of sale terminals that use a four-digit PIN code instead of a signature to validate transactions.

From 1 January 2005 European retailers using the new chip and PIN terminals will be protected from liability for fraudulent transactions and APACS said the roll out is "on track".

Concerns have been raised about counterfeit card criminals who will be forced to change tact by 'shoulder surfing' customers at chip-and-PIN-enabled checkouts and then stealing the card by pick-pocketing or mugging the person outside the store.

But Gary Hocking, director of chip and PIN implementation at APACS, said fraudsters into card counterfeiting would be forced into other areas such as CD and DVD counterfeiting.

"Someone who sits in their bedroom counterfeiting cards is not going to go out into the streets mugging old ladies," he said.

There is already evidence that fraudsters are targeting other weak links in the chain and Sandra Quinn, UK spokeswoman for APACS, said there has been a sudden spike in the number of cards stolen in the post due to the high volume of replacement credit and debit cards being sent out to customers as part of chip and PIN. But she said this would be a temporary blip.

At the end of October 30.8 million cardholders had at least one new chip and PIN card and more than 520,000 tills in the UK have chip and PIN terminals. Major retailers already on board include Safeway, HMV, Shell and Selfridges.

Hocking also dismissed concerns that the onus of liability on fraudulent chip and PIN transactions would shift to consumers.

"There is no reason why it should be any different to fraud at an ATM. It is down to the banking ombudsman," he said.