Small business could be liable for credit card fraud

As of Oct. 1, credit card companies shifted responsibility onto businesses to reimburse victims of fraud if they don’t have the updated card machines to read the chips.

While larger businesses, such as Walmart and Kroger, installed the machines months ago, some small businesses in Athens were left out of the loop about the requirement.

Stephanie Williamson, owner of Athens Atomic on Clayton Street, said she didn’t know about the Oct. 1 deadline.

“I’ve heard about the new machine, but I didn’t really know why we needed to upgrade,” Williamson said.

Despite the threat of liability for fraud, only about 59 percent of retail locations in the United States will have the new machines installed by the end of the year, according to Aite Group, a financial research firm.

Officially, the cards are called EMV cards, named after the three companies to take the first steps toward adopting the new standard: Europay, MasterCard and Visa.

The chips are meant to reduce fraud because they create new data with every transaction compared to the magnetic strips, which use the same data each time, making it easy to copy.

There is an estimated $3 billion lost in fraud transactions in the U.S. every year, according to Aite Group.

Williamson runs all transactions at Athens Atomic through Square Inc., and she’ll have to buy a new register that is compatible with the chip cards.

“I’m going to get on that tomorrow,” Williamson said.

The machines are already installed at Heery’s Clothes Closet on College Avenue. Lindsay Lucas, creative director at Heery’s, said the store got them up and running about three weeks ago.

“I haven’t had anyone use the chip,” Lucas said. “The machines are only part of it.”

She added that it won’t help to have new machines if customers don’t know they can use chip cards.

Most recently issued credit cards and debit cards contain the chip. By the end of the year, 70 percent of U.S. credit cards and 41 percent of debit cards will have the chips, according to Aite Group.

Athens Atomic is not alone. Eddie’s Calzones on Clayton Street also doesn’t have the updated machines, said day manager Thomas Morse.

“This is the first I’ve heard of it,” Morse said.

He doesn’t like the credit card companies’ decision to put the liability on businesses.

“I can see the liability going to the business if it’s cash. If someone pays with counterfeit money, then yeah, it’s our fault for not checking it,” Morse said. “But for cards it’s not really fair, because there’s no way to check them.”


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