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Not Ready For Chip Card?

With the change to the "chip" card just days away, the NBC4 I-Team found evidence that thousands of retailers and millions of consumers are not ready. This lack of prep is a problem that could have a major impact on your financial security.

The deadline for retailers to be chip-ready is Thursday. After that, retailers who do accept chip cards become liable for all fraud losses.

The new generation of credit cards has microchips, called "EMV" chips, embedded inside the cards.

The chips promise better counterfeiting protection than the existing magnetic strips that use your same account number with each swipe.

"Every time you dip your credit card into an EMV terminal, it's actually creating a one-time use code that's the payment code for that transaction," said Sean McQuay of NerdWallet. "If someone were able to copy it, it'd be useless if they used it anywhere else. It was only a one-time use code, so it wouldn't be of any use to the hackers."

This new strategy for fraud prevention is great in theory. But a new survey conducted by ACI Worldwide, shows 59 percent of Americans still haven't gotten their replacement cards in the mail and only 32 percent even know the change is coming.

Let's say you know about the new cards, and you're ready to use yours. The problem is that the places you shop may not be up to the task.

Major chains, such as Target and Walmart, installed chip card readers in July, but less than half of small businesses know about the chip card deadline.

"EMV chips are only useful if both the consumer and the store are ready to accept EMV," said McQuay. "If both sides of that equation are not being met, then actually no upgrade has effectively happened and that transaction is no more protected by EMV than anything else."

The new chip cards still have a magnetic strip on the back and can be swiped, even with a chip embedded inside.

Whether you swipe your new card or your old one, if either gets hacked you still aren't liable for fraud losses.

If you haven't received your new chip card yet, contact your bank to request one.

Keep in mind, the new chip cards won't offer any better protection for online shoppers. In fact, cases of what's known as "card-not-present" fraud are expected to go up in the coming months since it gets tougher for hackers to hack in-store credit card terminals.

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