Avoiding Card Skimming Fraud
There are ways for avoiding card skimming fraud which is a form of credit or debit card fraud whereby card magnetic stripe data and possibly the associated PIN are stolen from victims to make unauthorized purchases online and over the phone or to create counterfeit cards to purchase items in person. In most cases, this is done by using an electronic device that reads the magnetic strip on the back of the credit card when the card is inserted in the card reader at gas stations, ATM and elsewhere. The card information such as card owner name, card number, and expiration date is captured by hackers at bank ATMs and gas pumps, for example, who have attached a hidden card skimmer to the card reader as well as a hidden camera to record PINs as they are entered into a keypad at a bank ATM or gas station.
Card Skimming Case
Some Costco shoppers were notified in early November 2021 to look out for possible sign of credit card fraud. The fraud notification warned the customers about potential card skimming scams that have affected approximately 500 Costco customers who had used their cards for purchases in four Chicago warehouses around the affected period. The skimming devices were discovered by Costco employees during a routine check in August 2021. The skimming devices apparently stole card information such as CVV codes, cardholder name, card number, and card expiration date.
Card Skimming Technology
Card skimmers come in various forms, from relatively simple devices that steal data from card swipes to more complex ones that generate counterfeit cards with the actual data stolen from the magnetic strip of the original card. Some card skimmers are placed inside real PIN pad devices at banks and retail stores alike. Other times, card skimmers are usually placed over the real card slot on automated teller machines (ATMs) or gas pumps. They often come with a tiny hidden camera to record PINs as they are entered in the PIN pads so not only scammers can make purchases but also withdraw money from the accounts with the stolen PIN.
Card Skimming Fraud Stats
According to a recent Aite Group report, 68 percent of business executives consider ATM skimming to be a serious concern. Some of this form of fraud should diminish if EMV (Europay, MasterCard, and Visa) cards are issued and ATMs are upgraded to allow EMV chip transactions. However, scammers seem to eventually work around new technology. Other parts of the world where EMV smart chip was implemented several years ago have faced substantial challenges that have not yet been focused at the US market. As the United States transitions to EMV-compliant ATMs and fraudsters develop new tactics, financial institutions expect cybercrime to overtake skimming as the most serious threat to ATM security.
Where is Card Skimming Scam Most Probable?
Statistics show that gas stations are targeted by scammers more often than any other business type due to the number of card transactions they handle daily for gas payments and other purchases as well as ease of installation of skimming devices and cameras around gas pumps and ATMs with possible collusion with gas station employees.
Avoiding Card Skimming Fraud – Businesses
Businesses that handle credit cards are required by law to adopt security procedures that include training employees on proper payment handling procedures when customers pay with cards. It is essential for employees to immediately report any suspicious activity related to ATM or credit card transactions. The lesson from the Costco incident is to have strict security around card readers and PIN pads. Only approved staff should be able to handle devices to prevent the installation of unauthorized devices and software. Cameras should also be placed in areas where card transactions occur such as gas pumps, and isolated ATMs to avoid the installation of unauthorized devices.
Avoiding Card Skimming Fraud – Cardholders
Here are some helpful tips to avoid credit card skimming:
- Be suspicious of ATMs that look odd.
- Avoid using ATMs in secluded areas. If you must use an ATM that isn’t located inside a bank or a typically secure area, look for cameras that might be hidden nearby to capture PINs.
- Cover you hand when entering PINs.
- Avoid entering PINs or inserting the card multiple times due to malfunction as this may be a trick to fully capture all data.
- When paying at a gas station, try inserting your credit card into the machine instead of swiping it through to pay for gasoline or other items.
- Use pump closest to store and well-lit area to ensure their employees and hopefully installed cameras have prevented unauthorized device installation.
- Use credit instead of debit to avoid entering the PIN.
- Use chip card reader instead of swiping as it presents less risk.
- Consider other payment options such as mobile pay or digital wallet when possible.
- Call your bank immediately if you think your credit card may have been compromised after visiting certain businesses. Let them know which businesses you did or did not frequent so they can take steps for protecting your account.
- Pay attention to the possible fraud notifications you receive from businesses such as in the case of Costco to contact your bank or card company.