Yes it is scary. To my knowledge the chip security has not been broken.
I have talked with them repeatedly. They keep insisting that the Chip/Card was present during the charge. Chase and AMEX would have had my back in this situation. For context the fraudulent charge was less than $20.00. In July I charged close to $10,000 on the Cap 1 card. Am I really going to attempt to defraud Cap 1 for less than $20.00?