New feature makes credit card fraud less likely

Check out that new credit or debit card, and you may notice something different.

There's the usual magnet strip across the back, above your signature, but on the front, at one end, is a small visible computer chip.

Thursday is the deadline for merchants to begin using the new chip cards, but while you're in your purse or wallet, you'll notice most of your cards are still chip-less.

The chips in the new cards generate a code that is unique for each transaction. That's much more difficult for thieves to obtain and use than the old magnetic strip, which remains the same each time you use it.

After Thursday's Oct. 1 deadline set by Visa, Mastercard and other card companies, banks that failed to issue chip cards or merchants that have not installed chip-card readers will have to cover the costs of fraud.

Credit card fraud hit Nebraska when five California teenagers were arrested Friday in connection with what may have been a national criminal enterprise involving mainly Romanian citizens.

They were caught after a customer reported having trouble with an ATM and bank officials found electronic devices attached to three of the bank's ATMs in Lincoln that "skim" and record bank card numbers and PIN information.

Police staked out the ATMs and saw a teenager drive up to one but then drive off without using the machine. He and his passenger, both 16, were arrested, and their cellphone led officers to three other teens.

While the information skimmed from the ATMs lets forgers create new cards that can be used to loot the bank accounts, Lincoln police said no account information was skimmed from these three machines.

Banks and consumers have not been so lucky in other instances; credit card fraud in the U.S. was estimated at $32 billion in 2014. In Europe, where the smart cards have been used for nearly 20 years, credit card fraud is nearly non-existent.

Banks have until a year from now to make ATMs compliant with the new cards, and gas pumps have until sometime in 2017.

The Lincoln case demonstrates that the upgrade probably can't come soon enough.

We won't hold our breath, however, waiting for credit card companies to reduce fees in light of the $32 billion in savings that could potentially result.