What were you doing on Valentine's Day last? Maybe you had a romantic dinner with a loved one, or perhaps like me were babysitting for such a couple. But February 14 2006 is memorable for another reason; it was the final switchover date for Chip and PIN in the UK - the new scheme whereby credit or debit card purchases are authenticated using a four-digit secret number rather than a signature.

The banking industry supported the change with two multi-million pound advertising campaigns - first, "Safety in Numbers", and then the heart-themed "I love PIN". (Always beware when someone tries to sell you a security product based on emotion rather than information.)

A press release issued at the time announced the fact that, after receiving their cards, 91 per cent of people said that they are "safer" than the old ones. No offence to Joe Public, but he is in no way competent to make such an assessment. That stat proves to me that they ran a successful ad campaign that gave people warm fuzzies, rather than necessarily showing any actual improvement in the level of security.

In reality, the clouds are gathering. One security research group at the University of Cambridge has successfully developed a prototype "skimmer", which could be miniaturised and built into any one of the hundreds of thousands of Chip and PIN terminals that UK consumers use every day.

Because the UK banks used the simpler and cheaper of two PIN encryption options, it is able to intercept and store the PIN and other details necessary to clone the card simply by listening to the conversation between the card and the reader. Next time you visit a restaurant, you could keep your card in sight at all times, yet your card information could be stolen and you would never know.

But most UK cardholders don't lose too much sleep over this sort of thing. After all, if it happens to you, you lose a token £50 or so and the bank reimburses you, right? Historically, banks have generally accepted liability for card fraud as long as you weren't negligent. However, the other important present the card industry gave us on Valentine's Day was a hidden one, not trumpeted by any ad campaign. It was the gift of liability.

Previously, if someone bought stuff with a cloned copy of your card, you could simply ask for your signature to be compared against the retailer's copy and if they were different, it was clear that you were not responsible. But, without the help of CCTV footage, how do you prove it wasn't you in the shop typing in your PIN to buy that glamorous and highly resaleable diamond-studded iPod?

The UK banking code of practice appears, at first glance, to cover the consumer in this situation. It says: "Unless we can show that you have acted fraudulently or without reasonable care, your liability for the misuse of the card will be limited as follows." It then gives various conditions, the worst penalty for which is £50.

However, there's no official definition of "reasonable". In reality, a fraud assessor at the bank will spend a few minutes sipping his coffee and pondering your case, and if he decides not to reimburse you, then that's it. They haven't broken the code of practice. They don't need to prove to anyone, least of all you, what their standard of "reasonable" is. And with PINs replacing signatures, there's no hard evidence either way, so there's not much you can do to change their minds. Not exactly chocolates and flowers, is it?

What can you do? You can protect your PIN by learning to type it "blind" - ie, without looking at the keypad. This lets you hold point-of-sale terminals against your body, or cover the keys at the hole-in-the-wall with your other hand. If you can't see what you are typing, chances are no-one else can either. But for other sorts of fraud like skimming, there's not much you can do except hope it doesn't happen to you. After all, what are the chances, given that there are loads of us. Safety in numbers...

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