Posted on
November 15, 2009 by
admin
I have been working in the credit card industry for some years now, and one topic which is keeping fraud departments busy is skimming. Skimming is a practice, during which the card details on the magstripe (magnetic stripe on the back of the card) is being copied, and then written onto another card. Since the magstripe data is electronic, it could travel to the other side of the world before it written onto another card. Often, the cards used as a ‘host’ for the stolen data are stolen cards which have been blocked by its cardholders, making the original data on that card unusable.
Special devices are used in order to skim the card. Such devices might be present at a point of sale (shop, restaurant, petrol station, etc.), or they might be fixed onto the slot of an ATM machine, being hardly noticable. In the case of ATM machines, there is usually a small, hidden camera somewhere in the area, aiming at also the recording the PIN number of the cardholder. This makes it so vitally important to always cover up the key pad when entering the PIN.
In a shop, restaurant, or any other point of sale, skimming devices are usually placed out of sight for the cardholder. In a restaurant, the waiter will usually take the credit card away from the cardholder while the cardholder remains seated at his table, the waiter later returns with the credit card and bill to be signed. What the cardholder does not know is whether or not the card has been skimmed. In a shop or at a counter, the clerk may pull the card through the POS machine (the card reader, which makes credit card transaction possible), or something which looks like a POS machine. Usually it is out of sight. Some card skimming devices can be placed on or over a real POS device of any kind, so that the card is skimmed while making the transaction.
In order to avoid skimming, do not leave the credit card unattended. For example, in a restaurant you may want to join the waiter to the POS machine. Especially at ATM machines or other unattended credit card payment devices, look whether there are any signs of manipulation or small damage, you may even want to touch the slot and see if there are any loose parts.
Finally, you will know when your card has been skimmed if there are curious transactions on your credit card bill, from places where you have never been, while you still possess your credit card (i.e. you did not lose your credit card, nor was it physically stolen).
The following is intended to be a short guideline of the first necessary steps. Further steps in the process might be present, depending on the issuing bank and nature of the crime. Actually, these guidelines apply not only to skimming, but to credit card fraud in general:
- Do not panic! Contact the 24/7 hotline of your issuing bank immediately and block your card. Tell the employee what happened, so that it is documented. Blocking the card will not allow the fraudsters to conduct any further transactions, and usually you can not be held liable for any transactions occuring after you called in to block the card.
- Check your bank’s guidelines to find out whether they are requiring anything special from you. File a request for a dispute. There is usually a required timeframe to do this. For Visa and MasterCard this is usually up till 30 days after the transaction date.
- You bank will guide you through the rest of the process. You may be required to send a written statement to the bank, stating you did not make the transaction, and possibly why so.
The rest of the process will take place in the background. Usually, the issuing bank will raise a dispute in your name, and the acquiring bank (the bank of the shop or company, where the transaction has been conducted) will have to provide proof, that the transaction was valid, and that all possible measurements were taken to prevent fraud. In the case of skimming, for example, the credit card number on the customer receipt (generated from the magstrip) would deviate from the number hotprinted on the physical credit card. Besides that, the fraudsters would not know how your signature looks like, since they do not have the physical card with them. Last, merchants are always entitled, and should, ask for an identifiction. In the case of fraud, the identification would be different from the details on the card. In the event of proven fraud, the merchant will be held liable for the fraudulent transaction, and the money will be charged back, meaning it is transferred back to the issuing bank. Depending on your issuing bank, your bank might already have compensated for your losses by means of a temporary credit, or they might transfer it as soon as they receive back the funds.
However: should a “fraudulent” transaction have taken place with your PIN number, the transaction is usually identified as authentic, and you might lose the money for good. Therefore, your best option is to memorize your PIN number if you can. If you still choose to write it down somewhere, never store it somewhere together with your credit card, for example in your wallet or in your purse. Always keep the PIN separated and highly confidential.
The good news is: many initiatives are being implemented to fight credit card fraud. EMV, also known as Chip & PIN, is a chip placed on the credit card, which makes it very difficult to copy the credit card information. You will know when you have an EMV enabled card when there is a chip on it. In order for EMV to work, the merchant also needs to have EMV enabled. You will know this if you are asked to enter your PIN code for a credit card transaction rather than providing a signature.
Possibly Related Posts:
This morning, as I was drinking my coffee and waking up slowly, I watched a report about a new type of scam which involves unauthorized bank transfers. Although the report mainly applies to the German banking system, this could also apply to other countries where law permits it.
