The United States accounts for only one quarter of worldwide credit card transactions, but about half of credit card fraud occurs here in the U.S. To help reduce the likelihood of fraud, credit card companies are changing from the current magnetic strip security to credit cards embedded with microchips (EMV). The new microchips create a unique transaction code for every transaction making it more difficult to counterfeit. Due to the new security, credit card companies will begin to shift their fraud liability beginning October 1, 2015.
In the past, credit card companies were held liable for fraudulent purchases made by nonprofit donors or members. However, with the new shift, if your nonprofit does not use EMV equipment for card transactions, it will become liable. Nonprofits need to ensure they stay up-to-date with regulations and the actions of banks. It is recommended to set a budget and purchase updated equipment to ensure the organization is not burned by the transfer of credit card fraud.
By Christine Haber, CPA, CFE, Manager chaber@legacycpas.com