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New credit card safeguards

Swipe and you've paid for a haircut and pedicure. Swipe again and you've booked a vacation. Outstanding dental bill? No problem, just swipe and your balance is back in the black.

But, as Canadians continue our love affair with plastic, criminals continue to come up with new methods of fraud -- everything from installing phony devices on ATMs to using cell phone cameras to produce counterfeit credit cards.

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The answer? Cards with computer chips that can be programmed to eliminate counterfeit almost entirely and re-programmed to keep one step ahead of the fraudsters who keep looking for ways to get around the card's security.

"Chip (technology) is a quantum leap over magnetic stripe technology," says Mike Bradley, vice president of new products and platforms for VISA Canada. "It's a secret set of keys inside the chip that make it virtually impossible to copy. And the information's not static; it can be changed if we need to."

Technology slow in coming to Canada
Chip cards were first announced in Canada by VISA and MasterCard in 2003, several years behind Europe and parts of Asia. That explains why the first Canadian card to carry the chip is RBC's Avion Visa. Essentially a travel reward card, Avion cardholders can benefit from chip security while abroad, but not yet at home since banks are some years away from having the supporting infrastructure in place, in Canada. Tim McGaugh, RBC program manager, reports that a few merchants have the chip technology today, so the rollout has begun on a small scale.

"Canada did not move as quickly as some parts of Europe or Asia," says Catherine Johnston, president of the Advanced Card Technology Association, which advocates for smart card technology. "We are in the middle, but that means we can learn from what other countries have done. And we are moving well ahead of the U.S., (which) hasn't even started to move to chip."

Johnston says that because the chip is computerized, it can store sophisticated identifying information such as biometrics (eye scans, fingerprints, etc.,) that make it more fraud-proof. It can be programmed to ask the holder questions and information can be added or changed to keep it safe down the road.

"Magnetic stripes were introduced 45 years ago to enable us to do something. They were never designed to allow someone to impersonate you, but that's what has happened with that technology," Johnston says, calling the magnetic strip static technology that can't be programmed like a chip.

Some privacy concerns
Toronto security expert Peter Hope-Tindall, of dataPrivacy Partners Ltd., agrees that chip technology can safeguard identify and reduce fraud. But he cautions that consumers need to think about privacy issues along with the enhanced security. "People need to ask what information is being collected with chip, and what's being done with this information. Read the fine print in your agreement, and ask questions," he says.

In the future, he says, people will have chip readers on home phones and computers -- no more giving out your card number over the telephone when ordering concert tickets.

(continued on next page)
-- Posted: Jan. 20, 2006
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