Credit Card Skimming Mysteries
NEW YORK (MainStreet)It started with a meal at a Red Robin Restaurant in Des Moines, Wash. It ended with thousands of dollars of bogus charges that showed up on the victims' credit cards, as a rogue 20 year-old waitress apparently "skimmed" the patrons' credit cards. That means she copied the data on the magnetic stripe, letting her create her own versions of the credit cards.
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That is not a rare event. Every day there are thousands of credit card skimming incidents.
In Powell, Ohio, for instance, law enforcement recently warned about a credit card skimming ring -- "among the largest we have ever seen" --that focused on recruiting fast food restaurant employees with the promise of $5 for every skimmed card.
In St. Augustine, Fla. law enforcement now is raising a cry about an epidemic of skimmers on gasoline pumps.
In middle Tennessee, "a ring of credit card crooks is victimizing people across the South, according to police," reported WSMV.com.
A particularly bold skimming scheme that focused only on high end Manhattan steak houses and "power" cards of diners - such as the exclusive American Express "Black Card" -- resulted in 2011 in several dozen arrests of waiters who allegedly stole over $2 million on purloined cards.
Supposedly, smarter chip and PIN credit cards, sans mag stripe - are coming our way, possibly by 2015, and they will end the epidemic of cloned cards. But until then it really is simple to in effect duplicate a credit card, using a cheap skimmer.
An Internet search finds plenty of pocket-sized credit card skimmers selling for a few hundred dollars.
More fuel for retail skimming, said experts, is that banks are getting smarter about ATM skimming -- new ATMs have sensors that send an alert if a skimmer is affixed - and, then too, as Europe and Canada have widely implemented chip + PIN cards that has sent their professional gangs in search of more fertile places to rob.
Is the only cure to keep your credit cards in your wallet and pay only with cash?
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For starters, understand that with credit cards, the consumer liability for fraud is negligible - in fact it is zero in the event the credit card number, not the card itself, is stolen, per federal regulations. That is on paper, however. Stories of banks refusing to believe a consumer's report that a card was in fact stolen are a dime a dozen, and these cases are difficult to resolve.
The best defense is to guard against skimming in the first place.
Joe Severns, managing director of the IMC Group, a marketing communications agency in Georgia, said he is a recent victim on a credit card skim - he believes it occurred at a restaurant he frequents - and since then, he either pays with cash or he tells the server he wants to accompany him or her back to the credit card terminal. They go along with that request, said Severns, even if they think it odd.
That's not foolproof, however. Chris Waldron, a Virginia web hosting entrepreneur, said that after he and several friends attended a multi-day conference in Scottsdale, Ariz., ending each day at the same saloon, a few months later all of them starting seeing bogus charges popping up on their credit cards. They compared notes, identified the saloon, then reached out to law enforcement.
Where they heard more disturbing news. The culprit, said Waldron, was not a bartender as they suspected, but a route man for the vendor who serviced the saloon's Point of Sale terminals. The bad news: those skimmers typically are well camouflaged inside the terminals and detection borders on the impossible.
Watching the swipe of your card in one of these infected terminals would reveal nothing whatsoever out of the ordinary. But the card information would nonetheless have been copied and be ready for transmission upon the command of the criminal.
"Really, you cannot protect your credit card," said fraud expert Robert Siciliano.
Most of us, of course, tolerate the risks and that probably is justified.
But, said Siciliano, "whatever you do, don't use a debit card at POS." The problem there: if fraud occurs, that money is sucked out of the victim account and, yes, eventually it may be restored by the bank but along the way what has happened to rent payments, car payments, and the rest of the obligations? Better to be safe than sorry, said Siciliano.,/p>
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More advice is to always check, line by line, monthly statements. Crooks count on many of their thefts simply going unnoticed. A quick glance at the statement let's the consumer dispute any unauthorized charges but that also activates the fraud groups at the major credit card companies. More arrests, say the experts, just may deter the low paid employees who typically do the card grabbing and that is a big step towards curing this epidemic.
--Written by Robert McGarvey for MainStreet