Pumping Gas

Lawsuit alleges that Visa and MasterCard are colluding to prevent the adoption of the more secure chip and PIN technology so that they can maintain market dominance and profits.
June 16, 2016
​ATLANTA – Home Depot has filed a federal lawsuit against Visa Inc. and MasterCard Inc., alleging that the card companies are using security measures prone to fraud, putting retailers and customers at risk of hacking attacks by cyber thieves, reports the Wall Street Journal.

Home Depot said chip cards rolled out in the United States in recent years are less secure than chip cards used in Europe and elsewhere in the world. The reason: PIN. Even with the embedded chip, U.S. chip cards still require a customer signature for verification rather than the added layer of protection provided by a 4-digit PIN.

“Visa and MasterCard know perfectly well that a signature alone, without the additional step of requiring a PIN, provides virtually no protection against many types of payment card fraud,” Home Depot says in the lawsuit filed Monday.

The Wall Street Journal notes that Home Depot says in its lawsuit that Visa and MasterCard are colluding to prevent the adoption of more secure technology so that they can maintain market dominance and profits. “While chip-and-PIN authentication is proven to be more secure, it is less profitable for Visa, MasterCard, and their member banks and it provides a greater threat to their market dominance,” the lawsuit claims.

Home Depot also says that about 80 nations use chip cards, and that most require the use of PIN instead of signature, including England, France and Australia. ”Such cards offer an extra layer of security beyond the chip itself, by requiring the user to enter a four-digit PIN, thereby ensuring that the individual using the card is the card’s owner,” Home Depot states in its lawsuit. “Signatures can be copied or forged, and cashiers are not handwriting experts trained to identify forged signatures.”

The Journal continues that as a result, U.S. consumers and merchants such as the Home Depot pay fraud-related costs that are “unrivaled in the rest of the industrial world.”

In a similar lawsuit filed last month, Walmart alleges that Visa won’t allow the retailer to give customers the option to verify chip-enabled debit card transactions with PINs rather than the less-secure signature method, notes the news source. “Visa has acknowledged in many other countries that chip-and-PIN offer greater security,” Walmart spokesman Randy Hargrove said in a statement. “Visa nevertheless has demanded that we allow fraud-prone signature verification for debit transactions in our U.S. stores because Visa stands to make more money processing those transactions.”

NACS is educating Congress that PIN technology is a proven security solution—for both credit and debit transactions—available today. All EMV point-of-sale readers are PIN-enabled with encrypted security, and when PIN is required, whether a card number or the card itself is stolen, a PIN protects consumers against fraud. Policymakers in Washington have held several hearings examining the transition to EMV and the impact to small businesses, and NACS continues to educate legislators that chip-and-signature is not effective at protecting consumers without the additional security layer of PIN authentication.

The upgrade to EMV is a massive, estimated-$6 billion investment for the convenience and fuel retailing industry. Without the use of PIN, the investment in EMV technology falls short of providing customers with security against fraud. Learn more at PrivatePIN.com.