Thieves have figured out how to bypass those new credit-card chips

Their method isn't violating the chips at all though. It's a con job on the retailer. They fake a chip transaction which "fails" (as if the reader is broken) which then has the retailer fallback to the magnetic strip which is cloned from someone's strip in the old-school way of stealing someone's credit card details bypassing all of the additional security that the chip provides over a basic magnetic strip.

In other countries if the chip fails, there's no recourse because magnetic stripes do not exist. Can't use your chip, no sale. Its the same as not having cash on you. Retailers in the US don't want to lose customers, so they just over look it, and crap like this happens.

Physical security and policies are key in data protection.They were able to use skimmers and the stupid store didn't actually do their job to see the card.

chip-and-PIN vs. the chip-and-signature system the US adopted much later. Chip-and-PIN only helps prevent fraud with lost/stolen cards, a comparatively small problem here. (Further, Euro thieves now focus on tech to help them steal PINs, so that arms race is still on.) US card issuers decided that the lost transaction volume from people forgetting their PINs and stopping using a particular card was too costly. Retailers tend to bear the PoS fraud costs here, and so pass them onto consumers.

The ideal solution is probably the kind of one-time passcodes used in tokens like SecurID vs. the current static PINs, but again, the cost trade-off there is currently unattractive. One way or another, consumers end up paying most of the costs of fraud; the issuers' and retailers' main incentive is to keep you spending and the lines moving quickly, only addressing the cheapest-to-solve fraud problems. Banks and other issuers decided years ago to focus instead on the back end of the problem, investing in AI-like systems to detect and flag suspicious transactions. Heavy up front, now largely automated, so very cost-effective.

i find it funny that at walgreens, etc... when i use my wifes debit card, the screen says 'enter pin' but hitting the yellow button will skip and just process without pin.

Hmmm. Good to know. Thanks!

flag: location, time of day, day of week, day of year, type and size of purchase, history with the retailer, etc.

So they did notice when someone in Maryland was making big purchases at Best Buy with my debit card (probably stolen from an online retailer that didn't follow the rules about purging my card info after 30 days). I've gotten alerts right after I made a purchase on holiday overseas: "Are you really in Italy?"

They build a pretty detailed profile of your spending and life habits, the models are sophisticated at spotting anomalies, and thanks to machine learning, they get better all the time.