We are aware of reports coming from multiple sources and regional anti-fraud groups of various types of counterfeit credit card use throughout Wisconsin. A heightened level of counterfeit credit card activity is being used for over-the-counter cash advances at financial institution branches and at ATMs (skimming operations and counterfeit card use). Most of the activity is likely the result of criminal groups moving through the area. It’s possible that this heightened counterfeit card activity is the result of the impending.
EMV/chip card counterfeit fraud liability shift occurring on 10/01/2015. On this date, the entity (card issuer or merchant) that has not invested in EMV acceptance will hold the fraud liability for counterfeit credit card use. This date is not a compliance deadline, it is an incentive from the payment brands toward card issuers and merchants. Additionally, there is a lot of misinformation circulating about EMV/chip card acceptance. Criminals may believe that it will be much harder to use counterfeit cards after this date, whereas, the deployment of EMV terminals at merchants and financial institutions is likely to roll out gradually with some estimates indicating that only about 25% of merchants will accept chip cards by the end of the year. In addition, it’s likely that terminals will still accept magnetic stripe fallback indefinitely in the event the chip does not work. Although card issuers have the ability to configure whether they will accept magnetic stripe fallback, it’s believed that a very high percentage will do so in the interest of not standing in the way of legitimate transactions. Additionally, ATMs and automated fuel pumps have another two years before their counterfeit liability shift. Therefore, magnetic stripe counterfeit fraud is likely to continue. In other countries where EMV has been deployed with magnetic stripe fallback, criminals disabled the EMV chips through smashing or other means in order to force the merchant to process the transaction via magnetic stripe. If the card issuer allows for magnetic stripe fallback transactions when setting up their EMV program, the card issuer will hold the counterfeit fraud liability even after 10/01/2015.