Slideshow 5 EMV Horror Stories

Published
  • September 23 2016, 10:03am EDT
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The U.S. shift to EMV-chip card security hasn't been smooth. Many companies saw the card networks' Oct. 1, 2015 fraud liability shift date as a starting point rather than a deadline, and even the companies that thought they would be unaffected by the EMV transition found themselves dealing with major headaches.

Bashas'

Perhaps one of the biggest frustrations with EMV was that the liability shift took effect even if a merchant's schedule for conversion was out of its hands. The Arizona grocery chain Bashas' began converting its 1,400 checkout lanes a year ahead of the deadline, but ran into bottlenecks on the software side and was on the hook for chargebacks for 10 months beyond the liability shift date.

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Netflix

Netflix relies on its ability to renew monthly subscriptions, but EMV made that just a bit harder to deal with. In late 2015, the company attributed a 10.2% decline in its year-over-year subscriber count to the EMV transition, since many issuers chose to provide new account numbers and/or expiration dates when they issued chip-enabled cards — and subscribers did not provide this updated information to Netflix.

Hotels

Hotels have a business model that makes it hard to transition to EMV: they keep a customer's card on file for the duration of the stay, then add charges at the end. Hotels do not see themselves as "prime targets" for fraud, but "they're by no means immune," said Aite Group's Julie Conroy. In 2015 — the year the EMV liability shift took effect — Trump Hotels, Hilton and Mandarin Oriental were each victims of data breaches. And White Lodging, an outsourcer that manages hotels for Holiday Inn, Marriott and Sheraton, reported a major breach in 2014.

Gift Card Fraud

Despite EMV's anti-counterfeiting measures, fraudsters can still use stolen EMV cards as magstripe cards at non-EMV stores. One scam involves using these stolen cards to buy open-loop gift cards at non-EMV grocery stores. Since gift cards typically do not use EMV, those cards are as good as cash.

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Debit Delays

Debit cards are lagging credit cards in the EMV transition because the U.S. payments industry had to agree on a way to adhere to the country's legal requirement of providing multiple routing options for merchants. This added delay made it much harder for debit issuers and merchants to meet the EMV liability shift date.