A recent news article provides a grim reminder that credit cardholders must try their best to protect their PIN – or else they could be held liable for fraudulent charges. A Scotiabank cardholder recently found this out the hard way. She was originally on the hook for $4,000 in fraudulent charges. Apparently, it wasn’t until the media got a hold of the story that Scotiabank backed away, offering her a $4,000 settlement.
Lyndsay Passmore was the apparent victim of a skilled pickpocket. The resident of East Vancouver knew something was wrong when she noticed four cards – her Scotiabank debit card, line of credit Visa, gold Visa, and American Express credit card – were missing. Passmore made a wise decision – she immediately called her banks to let them know her cards had been stolen.
While American Express noticed an abnormal spending pattern and cancelled her card before she reported it stolen, Scotiabank did not. Passmore was apparently two minutes too late, as the thief had just ringed up $4,000 in fraudulent charges.
The Downside of Chip-and-PIN Technology
Chip-and-PIN technology is supposed to better protect cardholders by making it more difficult for criminals to ring up fraudulent charges with stolen credit cards. Instead of trying to forge a signature like traditional credit cards, criminals have to try to figure out the PIN. Passmore’s Scotiabank credit card had Chip-and-PIN technology, but somehow the thief was able to obtain her PIN and make fraudulent charges.
Scotiabank originally held Passmore liable for one simple reason – the thief was able to get her PIN right the first time (there were no failed attempts). With Chip-and-PIN technology it’s up to customers to keep their PIN a secret and prove that they didn’t inadvertently give away their PIN to thieves. That includes keeping your PIN separate from your cards (not writing it down on a piece of paper) and not choosing a PIN that’s easy to guess (such as your year of birth). Previously with traditional credit cards, cardholders could dispute if the signature was actually theirs.
Passmore says she didn’t make any of those faux pas. She insists the criminal must have looked over her shoulder (something referred to as “shoulder-surfed”) when she was entering her PIN at a brick-and-mortar retailer.
She could have also been the victim of a thermal imaging reader. Using this technology, thieves can use their smartphones to figure out the keys a cardholder entered (including the order). While this method is possible, according to the Canadian Bankers Association it’s rare, as it requires a lot of work from thieves.
The Bottom Line
When choosing your credit card PIN, although it can tempting to choose a PIN that’s easy to remember like your year of birth, you’re leaving yourself open to being held liable for fraudulent charges. For a refresher be sure to read our article, Tips on Choosing Your Credit Card PIN, to make sure you’re protected if your credit card is ever stolen.
