Plastic cards – ATM/ Debit and credit cards – are being “skimmed” by fraudsters, replicated onto counterfeit cards, and used to steal the money and credit of unsuspecting consumers.
What is “skimming”?
Skimming is the copying of encoded data from a card’s magnetic stripe by using a small electronic device or “skimmer”. This data is then used to produce a counterfeit duplicate of the card. Skimmer devices are often used in conjunction with a hidden camera or keypad overlay to steal the user’s Personal Identification Number (PIN) at the same time. Skimming can occur when a card is swiped through a magnetic stripe reader at an ATM or point-of-sale (POS) terminal.
Plastic cards can be skimmed in a variety of ways:
♦ At an ATM, either a false front is set up or another electronic device is linked to the terminal to capture the information when the card is swiped and the PIN is entered.
♦ At a merchant location – often when the card is out of sight – handheld skimming devices are used to capture the information on the card.
♦ Through transfers – as it passes from one organization to another during authorization – data is obtained by tapping into telephone lines or capturing satellite transmissions from the airwaves.
♦ From stored data – including electronic data capture terminals, personal computers and mainframes. Criminals hack into these systems to retrieve and copy valid account data.
Fraudsters skim plastic cards in order to circumvent the Card Verification Value (CVV) or Card Validation Code (CVC) protection.
Through skimming, a criminal can steal the card's CVV/ CVC, expiration date, 16-digit card number, cardholder name, and other data. In other words, skimming will give the criminal everything he needs to create a counterfeit card.
How is skimming prevented?
♦ One method used by financial institutions to prevent and reduce card theft is enforcing a cap on the daily number and dollar amount of withdrawals or purchases.
♦ Fraud protection monitoring is used to track the spending patterns of cardholders and detect suspicious withdrawals or purchases. In some cases the card is blocked until the cardholder is contacted and the transaction(s) verified.
♦ Merchants are prohibited from retaining or storing magnetic stripe data subsequent to an authorized transaction.
♦ Card users should be alert to foreign devices attached to or adjacent to an ATM.