Sadly, the banks have known about the problems behind credit card authentication for about 20 years. Any fix they can come up with tends to lower transaction volume and increase transaction costs -- so it's more cost effective to ignore the problem. If customers notice the banks reimburse them -- though some banks are pretty rude about it. If they don't notice, there's no problem.
Hey, VISA/MasterCharge and their franchisee banks have to make money! Any bank that really pushed for a better system would lose business and have to abandon the credit card market.
Then there's the small detail of using Social Security Numbers as a global personal identifier. SSNs are on insurance cards and in just about every database you can imagine. We might as well tatoo them on our foreheads.
So what's a poor fool to do?
- Lobby congress -- this needs legislation, voluntary fixes have failed for a generation. Of course banks make large donations to reelection campaigns. Maybe vote Democrat?
- Use American Express -- they do take security more seriously.
- Don't carry checks -- they're really bad news.
- Convince the credit reporting agencies to put a "fraud watch" marker in your file -- makes it harder to create a fraudulent account.