As online identity and financial theft continues to run rampant on the web through the use of phishing, malware and other social engineering tactics, credit card skimming still continues to be a hassle. As more and more awareness is raised about credit card theft, consumers tend to be more careful about their plastic nowadays, but the scammers are getting more savvy too.
Today's thieves have graduated beyond stealing a number off a customer's card when they aren’t looking. Instead, they have exploited technology to help aid the theft right under a customer's nose. In other ways, they'll exploit a third party (social engineering, point-of-sale malware, even website menus, just to name a few) in order to hit the big payoff.
While scammers have come up with these newer ways to rip off credit card information, the good old-fashioned method of skimming card information is still pretty common. Once thieves get the card information, they replicate it either by creating counterfeit cards or sell the information on the black market.
Use Portable Skimmers
Portable skimmers are small devices that fit in the palm of one's hand and capture vital credit card information including the card owner's name, account number, expiration date and/or other security codes included with the card. These gadgets are cheap and can be found for about $50 bucks online. 1 How this works is the thief covertly skims the card through the device during a customer transaction and the gadget collects the digital information.
This type of approach is frequently used in restaurants and/or fast food drive through windows when servers take the card temporarily out of the customer's visual sight. Later on, often after numerous credit card thefts have occurred, the aggregated details are then taken off the device. Most often these skimming devices will be used by dishonest employees who are ripping off their employer's customers when they run charges for purchases, although they may have been hired to act as a middleman and be a small part of a large crime ring.
Beware of the Middlemen
While portable skimmers can be used by anyone, it is common for ringleaders of credit card fraud typically "outsource" the actual theft to a middleman to act as the go-between the victim and the fraudster. These middlemen are usually carefully selected employees of various businesses, chosen because of their jobs allowing them to have access to many credit cards per day.
The workers chosen by the ringleaders are typically lower salaried employees who may be tempted when presented with an easy way to earn some extra cash. These employees are handed the aforementioned skimmers. In 2009, statistics in Florida showed fraud ringleaders typically paid, on average, between $10 and $30 per account information pilfered. 4
Many banks and businesses that have their credit card processing set up as self-service could be used as the point of theft for fraud. What thieves do is install skimming devices over the existing credit card scan in order to nab the information as consumers think they are giving it to the business and/or bank. Often they install small cameras or use a fraudulent pinpad which collects any PINs used for debit cards.
Other thieves are bold enough to pose as technicians and approach businesses telling employees they have come to replace or upgrade their equipment that processes credit cards.
What Businesses are Most Targeted?
Skimming can happen anywhere, but the most common types of businesses targeted to act as the source of cards are usually restaurants, fast food drive through windows, movie rentals kiosks, bars and gas stations.
In the case of gas stations, as more and more pumps have become "pay as you go", thieves often install skimmers either inside or outside the pumps and then patiently wait. As customers are paying for their gas, the thieves use wireless to pilfer information as it travels from the gas pump to the server, downloading it on a laptop or other mobile device. Employees monitoring would have no way to see something was amiss. (Although, in some cases, the employee may be in on the scam).
Skimming is a Problem for Everyone
Credit card skimming is not only an issue for consumers, but for businesses. In order to protect their brands and/or individual reputations, businesses have to diligently monitor both privacy and security, not only in practice, but in terms of their physical equipment.
It is of value to understand what credit card skimming is in order to protect yourself. Even the most vigilant consumer can fall victim, but by taking a few extra steps and being proactive you can reduce the risks:
- Buy from businesses where you watch the employee scan the card and you sign a receipt
- Inspect any machines you use
- Diligently check credit card statements
- Immediately report anything that does not look right on your account
- Plan to pay cash for gas or in other places that are higher risk (in the United States, many gas stations give discounts to cash-paying customers anyway)
- Skip the convenience of "pay and go" when buying gas, go into the store to pay
- Walk away from a situation where swiping your card does not feel "right"
Fortunately, many credit card companies are vigilantly watching out for odd activity, but stuff does slip by, so follow your account's activity carefully. Often officials track back through reported instances and detect patterns, ultimately resulting in catching the thieves.
Ripping off credit card information is big business. According to Creditcards.com:
"A Federal Reserve payments study released in July 2014 found more than 28 million unauthorized transactions on credit, debit and prepaid cards, totaling $4 billion in fraudulent charges." 3
Credit card theft is not only lucrative for criminal rings, but has gotten sophisticated in nature as well from a tech point. While other places in the world have already adapted chip-based credit cards, the United States has been slow to update. The good news is many major credit cards in the U.S. are in the process of, or have already, sent out the new EMV chip cards during 2015. It is anticipated switching over to chips will reduce fraud. Consumers still have to be cautious though because many cards will still contain the magnetic strip to be backwards compatible until all businesses upgrade their hardware and software.