identity theft schemes involving credit cards, skimming is one of the most common and hardest to prevent. While the equipment involved with a skimming scheme may be high tech, its execution requires a frustratingly low level of sophistication. While phishing scams require a certain degree of gullibility on the part of the victim, having your identity stolen by a skimming device can happen to even the savviest card user. Nevertheless, you can help reduce your chances of being the victim of skimming by understanding how it works and following a few important safety tips.
How Skimming Works
Skimming is a method of stealing your credit card information by simple means, such as photocopying receipts or by more sophisticated means, such as equipping an ATM with a skimming device. In most cases, your credit card will be skimmed by a corrupt employee while processing your transaction. The employee may take your card behind the counter and swipe it through a handheld skimmer before processing your account. The information contained in the magnetic strip is then transmitted and saved electronically, which allows criminals to steal hundreds of credit cards at once. The employee must also copy down the credit card security code from the back of the card as well. In other cases, the skimming device will actually be built-in to an ATM or gas pump that has been tampered with. These devices can be installed over the card slot without hindering the functionality of the machine, thus leaving you unaware that your information has been stolen. For these schemes, a small camera is also used in order to record your PIN number or the CVV code on the back of your card.
Ways You Can Stop Skimming
While skimming is notoriously difficult to detect, there are a few measures you can take to protect yourself:
- Never let your card out of your sight. At restaurants, pay at the register whenever possible, rather than giving your card to your server. If a retail cashier says he needs to run your card through another machine, follow him and make sure he doesn’t run it through any unauthorized devices.
- Use only secure ATMs. Use ATMs that are located indoors, ideally inside your bank. ATMs that are located on the street in sparsely trafficked areas and ATMs that are not monitored by cameras are more prone to compromise.
- Be wary of suspicious machines. While most skimming devices are nearly undetectable, some of the poorer skimmers will look conspicuous when installed improperly. If there are multiple ATMs in the area, ensure that the slots all look identical. Look for protrusions from the slots, variations in the coloring on the machine and deviations in style in signage. Beware of makeshift signs that instruct you to “swipe here first” or “use only this machine,” especially when the other ATMs appear functional.
- Check the area for unauthorized cameras. Some cameras can be as small as a pinhole and can be affixed to brochure holders or right along the card slot. Most banks will monitor their machines with cameras, but legitimate cameras will not have a view of the keypad.
- Do not accept help from strangers. If you are having difficulty using a machine, do not allow someone else to direct you to another ATM or handle your card. They may swipe your card surreptitiously through a handheld device or bring you to a compromised machine.
- Carefully monitor your credit card and checking statements for unfamiliar transactions. Credit card thieves often use stolen cards intermittently and for smaller amounts to avoid detection.
What to do if Your Card has been Skimmed
Once your identity or credit card information has been stolen, there is little you can do to contain the information. Instead, it’s best to take immediate action to control the damage. Do each of the following as soon as you discover that you are a victim of credit card fraud:
- File a police report. In order to dispute fraudulent charges, you will need to file both a police report and an identity theft report (see below). Be as detailed as possible when filing your report and write down your police report number.
- Get an Identity Theft Report. Obtain this when you file your police report. Not all police departments handle this the same way. In order to ensure you get what you need, use the FTC’s Law Enforcement Cover Letter.
- Send your Identity Theft Report to all credit card companies and credit reporting agencies. This includes the issuer of your card, Experian, TransUnion and Equifax. Include a copy of your police report, your Identity Theft Report, your supporting documentation, and the FTC’s Credit Reporting Company Cover Letter.
Remember: always act quickly. According to U.S. federal law, you are no longer liable for any fraudulent charges after your report the theft. Most issuers have a 24-hour hotline on the back of the card or on their website, so there is no excuse not to call immediately. Federal law also states that you are only liable for up to $50 per stolen card. But in order to protect yourself, you will need to follow all the steps above. For more information, see the FTC’s microsite on Identity Theft.
Skimming is a nefarious scam that preys upon the unsuspecting as well as the vigilant. While improvements of the card security code have helped to stem the exploitation to some degree, the problem remains prominent. Unfortunately, there is only so much we as individual consumers can do – the rest of the solution lies in the hands of the government and the credit card companies. But by remaining responsive, diligent and wary, we can help prevent the damage from identity theft scams such as skimming.