Notorious bank robber Willie Sutton reportedly said, “You can get more with a kind word and a gun than you can get with just a kind word.” These days, bank robbers don’t need kind words or guns. Bank jobs are no longer done face-to-face. Card readers, hidden cameras, and keyboard overlays are the tools used by modern thieves.
The Secret Service estimates card skimming losses at $8 billion annually. And it’s getting worse. Last year, FICO reported that skimming was up 174% at bank-owned ATMs, up 315% at non-bank ATMs. And it’s not just at ATMs where you’re at risk, skimming at gas station pumps is on the rise.
Why the big increase? Simple! It’s gotten really easy to get into this business. A crook used to have to have some technical know-how to make and install a skimmer. Today, complete kits are available online. And while card skimming is illegal, buying a skimmer is not. (In some States, even using a skimmer to defraud is only a misdemeanor.)
Here’s how the scam works: A skimming device is attached to the card slot of an ATM or gas pump. You insert your debit, credit, or ATM card and the device collects data from the magnetic strip on the back of the card. Your PIN is captured with a hidden camera or a fake keyboard. This information is then transmitted to the thief who is parked nearby with a laptop. He can now clone your card to make purchases or sell your information online to a crime syndicate. And with your PIN, he can empty your bank account.
It’s hard to know when your card has been skimmed. Most victims find out when they receive their monthly bank statement or get a phone call from the bank’s fraud detection department.
But you can take these simple precautions to minimize your risk:
- Use ATMs that are inside the bank. Those that are outside the bank are more vulnerable to tampering.
- Whenever possible, use the same ATM for your cash withdrawals. You are far more likely to notice signs of a skimmer installation at a familiar machine.
- Try to jiggle the card reader before inserting your card. If it moves, that’s suspicious, so find another ATM.
- Minimize your use of ATMs. Get cash back with your debit card at the supermarket instead.
- When putting in your PIN, cover the keyboard with your other hand. Always assume someone is watching.
- If you’re in a bank that has a row of ATMs, take a good look at all of them. They should be identical. If you spot even a subtle difference—maybe one machine without a flashing card slot—go elsewhere.
- Be particularly cautious on Saturdays and Sundays when the banks are closed. Crooks like to install their equipment on weekends because bank personnel aren’t around to monitor the machines, and it’s harder for customers to report anything suspicious
- At the gas station, your best defense is to pay inside or pay cash. (Many stations give a discount for cash, so this can save you money as well.)
- If you pay at the pump, use a credit card, not a debit card. And use the pump that’s closest to the cashier. Avoid any pump that can’t be seen from inside.
- Keep a sharp eye on your bank statements. If you haven’t yet done so, sign up to get online access to all of your accounts so you can regularly monitor activity and receive instant banking alerts. Think of it as an early warning system for fraud.
The New Chip Cards: More Security?
The credit card companies haven’t been standing around doing nothing. They have created EMV technology that has been touted as an answer to credit card fraud. EMV stands for Europay, Mastercard, and Visa, the three companies that created the new standard. As a result, most credit cards—probably the ones in your wallet—have been replaced by the new chip cards. The good news is that, since EMV has been implemented, there has been a 75% decrease in credit card fraud at brick-and mortar stores. The bad news is that on-line fraud, where a card isn’t physically used, has soared.
More bad news: Not all merchants have the new chip-enabled terminals and are still using the old terminals. As a result, the new cards have the magnetic strip in addition to the chip which means they’re still subject to card-skimming fraud.
So even with the new cards, your best defense is still to follow the simple precautions listed above. And trust your gut. If something doesn’t feel right or look like, don’t insert your card.
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