They still can do that. The only difference is that they would then sell the numbers to be used online, instead of running as fraudulent card-present transactions.

At least in Canada, portable card readers are the norm. Specifically to counter fraud, you no longer expect to hand your plastic over to an employee who brings it behind the bar. They come to you with a wireless machine, and you insert your own card. It blows my mind how the U.S. is 10-15 years behind the rest of us; the technology behind "debit cards" in the U.S. compared to that of Canada and Europe is almost laughable. The refusal to perform a one-time upgrade to new tech, while continuing to absorb the costs of rampant fraud is completely senseless.