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Information for Better Decisions
Protecting Your Financial Resources
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Skimming
You've probably heard of skimming, but what exactly is it? Skimming
takes place when criminals copy information contained on your
bank card's magnetic stripe and use it for unauthorized purchases,
to make illegal cash withdrawals, or in the production of counterfeit
cards. Skimming is today's fastest growing fraud problem.
How does it happen? A legitimate electronic card reader, or "skimmer",
is used with cash registers and/or credit card machines to gather
the information that is encoded in the magnetic stripe. This may
include the cardholder's name, address, telephone number, card
number, credit limit and PIN number. However, when used with criminal
intent, this same information can be used to defraud unsuspecting
consumers. What makes a skimmer so easy to use it's size. It is
roughly the size of an electronic pager.
When does skimming happen? There are generally three places your
confidential information can become compromised:
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At the merchant location itself,
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During the transmission process used for
authorization purposes, or
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At the point of storage.
Fraudulent skimmers can be connected to
any phone line between the phone jack and the credit card machine
itself. When a consumer makes a credit card purchase, the card
is swiped and the second electronic skimmer captures and stores
the information, which can then be manipulated for a variety
of illegal purposes.
"Ghost Terminals" are created by criminals that attach
fake touch pad screens and key pads over legitimate card readers
and key pads on ATM machines. Users get an error message on the
fake screen indicating that the ATM is "out of service",
but the skimmer has already read and stored the card's information.
Another common scenario is one in which a second skimming device
is kept near the legitimate card scanning device in a store, or
a portable device (which can usually store up to 100 account numbers
at a time) is carried in the pocket of a retail clerk. The card
is swiped twice: once through the legitimate machine, and once through
the second device for the purpose of stealing the magnetic stripe
information. In many situations, the merchant's employee is either
the thief personally, or is paid a flat fee to obtain the information.
The skimmer is equipped with a button that can be pressed to immediately
erase all of the collected data, effectively eliminating any evidence
of the crime, making prosecution difficult even if the thief is
discovered.
Skimming is a crime that is most often carried out in businesses
where there is a high rate of employee turnover, such as gas stations,
restaurants, or retail stores. Credit card skimming has escalated
to account for 25 percent of all fraud involving high-tech devices
today, compared to only 2 or 3 percent just a few years ago.
The best way to protect yourself against skimming is to be aware.
Keep an eye on your credit card when you hand it over for payment.
Pay attention to the look of your favorite ATM machine - has it
changed? Check your receipts against your statements every month.
Does everything match up? If you find an unfamiliar transaction,
report the crime to the police and your financial institution! Finally,
monitor your credit.
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