Congressional Testimony: Chip and PIN Provides Better Protection for Consumers

(WASHINGTON, DC) After today’s second House of Representatives Committee on Small Business hearing on the transition to EMV payment cards, Steve Pociask, President of the American Consumer Institute Center for Citizen Research, issued the following statement:

“I once again thank Chairman Chabot, Ranking Member Velazquez, and the House Committee on Small Business for holding another hearing on this important subject. I was pleased to see the Chairman honor his pledge to hold additional hearings on the subject that included the perspective of small businesses and retailers. I hope subsequent hearings will be held to consider the point of view of consumer advocates who have been vocal on this issue.

Today’s hearing rightly explored the challenges, mounting costs, and business interruptions small businesses across the country have had to endure to meet the arbitrary deadline imposed on them to transition to chip-equipped cards by the nation’s credit card companies. And for what? A half-measure that could still leave American consumers susceptible to fraud that also forces retailers to now bear more financial liability if fraud occurs. Ultimately, these costs will be borne by consumers and it could have been avoided.

As one of today’s witnesses attested to, chip-equipped cards protect banks and credit card companies from the types of fraud they expect, but a Personal Identification Number (PIN) is the single most important way to protect consumers and retailers who have to conduct these transactions.

Combining chip-equipped cards with a PIN requirement is a critical security component that cannot be dismissed. Unfortunately, the credit card issuers, the big banks, and the card processing networks have decided to issue chip-equipped cards while still requiring entirely fallible signatures.

Today’s hearing was also revealing. Not only did we learn that the banks and credit card companies did not do a good enough job educating the public and small businesses about the October 2015 liability shift deadline, but many of their other claims were similarly disproven. Contrary to the credit card industry’s often-repeated yarn that retailers do not prefer the more secure chip and PIN payment mechanism, several of the witnesses today explicitly expressed support for it. They, like us, believe that if small businesses across the country are investing in new payment terminals to accept chip cards, they should at least be armed with the most secure technology available today to protect consumers, and that is chip and PIN.”

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