The National Retail Federation (NRF) said it agreed with a warning from the FBI that new chip-based credit cards are safer than traditional cards but still vulnerable to fraud and need to be used with a PIN instead of a signature to minimize risk.

“What the FBI is saying is what the rest of the world already sees as common sense,” NRF Senior Vice President and General Counsel Mallory Duncan said. “It’s the right thing to do, and we hope the banks are listening. We are pushing the banks to use all of the security the new cards are capable of providing, not just half."

In a warning issued earlier this week to consumers, merchants and law enforcement, the FBI praised Europay MasterCard Visa chip cards as being more secure than traditional magnetic stripe cards, but said they are “still vulnerable to fraud.” Despite card industry claims that the chips are difficult to counterfeit, the FBI said the cards “can be counterfeited using stolen card data obtained from the black market.” The bureau also said the chip “will not likely” stop stolen or counterfeit cards from being used online or in telephone purchases.

“When using the EMV card at a point-of-sale terminal, consumers should use the PIN instead of a signature,” the FBI said. “This fully utilizes the security features built within the EMV card.”

The FBI encouraged merchants to require that consumers use a PIN rather than signature, and said merchants should ask for a government-issued photo identification card when customers use a signature.

Despite the FBI warning, virtually all of the chip cards being issued in the United States are chip-and-signature rather than chip-and-PIN, leaving consumers without the option to use a PIN. By contrast, EMV cards used in 80 countries around the world for 20 years or more are routinely chip-and-PIN, saisd NRF. 

NRF said that it has argued for years that the new cards should have both a chip and a secret PIN, or personal identification number, saying that the combination of both is required to provide sufficient security. While chips make the new cards more difficult to counterfeit, the chip can be circumvented, and the chips do nothing to protect lost and stolen cards from being used. A PIN could prevent all of those types of fraud, even without the chip.

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