Card skimming fraud is a type of fraud that uses devices to read your credit card and steal your pin or password. It’s a type of theft that frequently happens at ATM machines, but it also is common at gas stations and any place that you swipe the magnetic strip of a credit or debit card. The latest scene of the crime are self-checkout stations in supermarkets.
The problem is that data on your credit card is stored in magnetic strip on the back of your card and the magnetic strip is not encrypted. Cheap devices are readily available to scan that data. Devices used to be large and unwieldy, but have become increasingly smaller and cheaper. These devices can be cleverly disguised and affixed to retail outlets that read your cards. They can also be used anyplace your card is scanned.
To foil card skimming fraud, new cards contain chips with encrypted data so those cards are safer in theory. We say “in theory” because it’s an enormous undertaking for banks, gas stations and retailers to replace the card reader stations and convert to chip-enabled card readers, so many still rely on reading magnetic strips. As long as your credit cards have a magnetic strip, they are still insecure.
This ABC News video clip is about 8 minutes long – a good investment for a quick education about what skimming is, how to spot it and steps to take to prevent it.
Here are skimmingfraud prevention tips we’ve gleaned from the experts over the years.
Use well lit, well-trafficked ATMS and gas stations with security cameras; go inside banks; be particularly careful at freestanding ATMs.
When using an ATM or paying at the gas pump, check for anything unusual and be alert for any devices that may be affixed. Look for anything that protrudes from or seems affixed to the machine, any color differences, any unusual stickers. Look for nearby mirrors, pamphlet holders, speakers, or devices that could house a camera.
Always cover the keypad with your hand to shield from any cameras that may be trying to record your PIN. It’s also a good idea to touch several keys with your fingers to thwart anyone trying to grab your pin via infrared heat detector readers.
Don’t let anyone “help you” at an ATM or credit card reader.
When paying at a restaurant or any retail outlet, don’t let anyone walk away with your card, have them read the card in your presence so that they don’t harvest your information with a small pocket-skimmer.
Check your bank account regularly to ensure funds have not been taken.
If you spot anything suspicious at an ATM or a self-service gas or grocery kiosk, alert the business or the police right away.
Prepaid cards are popular because they are easy to get, you can avoid cash and you don’t need a bank account to get one. Plus, because they are debit cards and not credit cards, you only spend up to what is loaded on the card. They are popular for everything from gift cards to paychecks — and re-loadable prepaid cards are increasingly popular for travel and as a funding source for kids going away to college.
But – and there is a huge but – not all prepaid cards are created equal. If you are not careful, you can wind up paying outrageous fees and charges to buy the card, to use the card, to add money to the card, and more. Plus, not all prepaid cards are backed by the FDIC, so if they are lost, tough luck (although you might check with your agent to see if your Homeowners policy will cover a cash loss up to a limit – typically no more than $200). To make matters worse, prepaid card scams are proliferating so you need to be on the alert.
While prepaid cards can be a good choice in some circumstances, It’s really important to be a smart consumer and to educate yourself about the pros and cons before you buy. Here’s a quick video from consumer.gov that talks about how you can lose money.
And here are a few good resources to educate yourself about prepaid cards and how to be an smart consumer.
Most people know the basic safety precautions to take when using an ATM, such as looking for safe, well lit locations and being careful to cover the keyboard when entering a PIN – but far fewer people are aware of the increasing threat posed by ATM and credit card skimming. With card skimming, thieves attach a camouflaged card reader over a legitimate card reader, such as the one at your ATM, gas pump, or store checkout. One might think it would be easy to recognize a phony card reader – but like thousands of victims worldwide, one might be wrong. The ruses are getting more and more sophisticated and harder to detect. Some devices are placed over a keypad to record your transactions and gather your data for later use. Others are micro-hand held devices that thieves can use to quickly scan a card. NetworkWorld offers an excellent article on ATM and credit card skimming that describes how the con works and offers an illustrated guide with examples of what to look for when using a credit or debit card. This is definitely an article worth reading and passing on.
To protect yourself from being a victim, make sure that you check out credit card readers before using them to look for any unusual signs – if you spot anything strange or get any error messages, report the problem to the bank or the responsible outlet immediately. Don’t let anyone help you at an ATM outlet – this “helpfulness” is a common ploy for skimmers. Also, sign up for the online services associated with your account and check your account activity and statements every few days.