The potential for fraud still exists, even with the embedded encryption chip (Not to be confused with RIFD (radio RF) readers).
The chip just makes in near impossible to "clone" your card and use the clone at stores who require chip readers.
The clone could potentially still be used with the mag stripe at places that don't have chip readers though.
The chip makes for a very secure card, it's the lack of mandate to totally eliminate the mag strip that leaves them vulnerable.
One hint: never use a debit card online. Always use a credit card. The probability of someone eventually stealing then selling your card info is high. Credit cards are always the burden of the card issuer and they don't have direct access to your cash. Mind you, you'll eventually get your cash back, but it could takes days, weeks, even months.
I go a step further. If retailers don't have a chip reader, I won't use my debit card... credit card only. And always cover the pin pad when typing in your pin, a skimmer and camera could be just about anywhere and you can't even trust the cashiers anymore.
All someone needs in order to use your card are the basics: Card#, your name and the 3 digit code off the back. So next time you hand your debit card to a hostess to pay for your lunch and she disappears with it, think what she/he could be doing with it. It's no different than handing them your checkbook full of blanks. Leverage the credit card and pay it off every week. It's still a pain if you get jacked, but at least it's not YOUR cash that gets stolen.