If you are like many people, Black Friday and Cyber Monday may be when you make a majority of your holiday purchases. According to the National Retail Federation, U.S. Black Friday retail sales for 2013 totaled $57 billion, down from $59 billion in 2012. For 2013, this averaged $407 per person in spending. However, U.S. Cyber Monday sales for 2013 came in at $1.7 billion, up a significant18-percent from the previous year.
Where there are credit cards, there is credit card fraud. The cost of credit and debit card fraud can be difficult to estimate, but Business Insider Intelligence estimated that for 2013, global card fraud cost $14 billion, including $7.1 billion in the United States. There is cause for concern this holiday shopping season as exemplified by Target recently having had more than 40 million credit card numbers stolen.
The New Jersey Society of Certified Public Accountants (NJSCPA) suggests you be aware of the following when shopping with credit/debit cards this holiday season:
The typical U.S. credit or debit card has a magnetic stripe that contains confidential card holder information. So, all a thief need do is obtain the card and he or she can make unauthorized purchases, either in person or online. As a best practice, merchants should match the signature on the back of card with the signature of the party who possessed the card. Unfortunately, many merchants do not double-check signatures.
There is another way in which credit/debit card fraud can occur: counterfeit cards. For example, a waiter at a restaurant may have a skimmer to enter the card, which captures the card number, allowing for a magnetic stripe card to easily be manufactured elsewhere. It’s best to keep good records of all credit/debit card purchases, and contact the credit card company right away if you suspect fraudulent transactions on your card.
Technology does exist that will make your holiday shopping more secure in the near future. Known as EMV (Europay, MasterCard, Visa) “Chip and PIN” or “Chip and Signature,” this type of card increases security through an embedded microchip that encodes information differently for each transaction. The chip also makes cards more difficult to counterfeit.
Chip and PIN cards require a password when making a purchase, much like withdrawing cash from an ATM. For the Chip and Signature cards, the signature authenticates the purchase. Obviously, the Chip and PIN is the most secure. By 2015, the majority of all credit cards in the U.S will be Chip and Signature cards. There are several websites that rate EMV cards that you can review to one day obtain cards that provide the most benefits for you.
Consult Your Local CPA
A Certified Public Accountant (CPA) can help you look at your credit card exposure and your options. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
To find more information on various personal financial matters, visit the NJSCPA’s public service website at MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA's free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
# # #
Editors Note: Money Management is a weekly column on personal finance distributed by the NJSCPA