Credit card skimming at restaurants and other retail establishments is a major contributor to credit card fraud and identity theft. Robbie Lopez, Vice President of Software Solutions for VeriFone, the global leader in secure electronic payment technologies, explains how credit card skimming leads to identity theft and fraudulent charges in this exclusive expert interview. He also provides practical tips on protecting yourself against skimming and gives a peek into the new technology to combat skimming.
Understanding Skimming
LoveToKnow (LTK): What is credit card skimming?
Robbie Lopez (RL): Skimming is an increasingly common practice in which a restaurant employee or a worker in another retail environment swipes the credit or debit card through a special device called a skimmer that records the card owner's account information. The skimmer copies the data that is contained on the card's magnetic strip. That data can then be used in identity theft or used to make a counterfeit card.
Americans lost $45.1 billion from identity theft in 2007, according to a study performed by Javelin Strategy & Research. The California research company reports 8.1 million adult Americans - about one in 28 - reported that criminals committed fraud with their personal data, such as credit card account numbers or Social Security numbers.
Where Skimming Occurs
LTK: Where is skimming likely to happen?
RL: According to the Mercator Advisory Group, restaurants account for 70 percent of card skimming instances. Restaurants are among the few remaining places where you hand your card to someone and it leaves your sight. During that long period, it can easily be run through a skimmer.
The data theft can also be low-tech - they can merely write down your name and card number, the card's security code and its expiration date. With that data, crooks can easily create cloned cards or use the data online to make purchases.
Protecting Yourself
LTK: How can cardholders protect themselves against skimming?
RL: The best thing you can do is to not frequent places where your card leaves your sight. However, there are a few other things consumers can do to keep themselves from being a victim:
- Understand how skimming works. Skimming devices can be used to capture and store information, not just from credit and debit cards, but also from driver's licenses and passports. In restaurants, small personal skimmers can be hidden in aprons.
- Think about what is at stake. Those little magnetic strips on a credit or debit card contain a wealth of encoded information, including your name, address, telephone number, card number, credit limit and PIN number. You should always try to keep your card in sight.
- Learn how to spot skimming devices. When you approach an ATM or a gas pump, you should give it a good once-over before swiping your card. Look for faceplates and card readers that appear to have been attached to the original machine. There may be signs with strange messages like, "Swipe your card here before inserting it into the card reader." On the other hand, there may be tiny cameras pointing at the spot where you'd type in your PIN.
Identifying Problems
LTK: How can a cardholder detect if his or her card was skimmed?
RL: You typically will not know your card has been skimmed until you check your balance or your card statement. You should always examine the statement closely to look for unauthorized charges. Sometimes a card issuer will notice charges that don't seem typical for you and call you to ask if you made the transaction. In any case, card issuers allow you to challenge charges you did not authorize and the industry stands by its customers.
Industry Solutions
LTK: What is being done in the credit card industry to combat skimming?
RL: The credit card industry continually beefs up security and standards. We're helping the industry and consumers by introducing products that offer higher security. VeriFone's wireless pay-at-the-table product called ON THE SPOT allows the customer to pay the check without the card ever leaving their possession. ON THE SPOT is now in use at nearly 50 restaurants nationwide, and we expect to see significant expansion in the coming years. Pay-at-the-table products are already in widespread use in European restaurants.
Another product, Secure PumpPAY, ensures a secure transaction at gas pumps, another environment where skimming is prevalent. The credit card industry is introducing tougher standards on these merchants in the coming years, meaning more secure payment technology will be available to consumers. VeriFone is working to prevent skimming by utilizing encryption and other technology to protect financial information transmitted over local Wi-Fi networks. At the same time, we are enabling restaurants to quickly serve their customers and to serve more customers during each meal.
Merchant Solutions
LTK: What can a merchant do to stop skimming by employees?
RL: Merchants are learning that when they use industry-compliant and solutions in front of the customer (such as ON THE SPOT and Secure PumpPay), they are virtually ensuring skimming will not occur. When the customer has control of his or her card at all times, the risk is greatly reduced because would-be skimmers don't have access to commit fraud, and merchants are protected. In retail environments like grocery stores, department stores and even fast-food restaurants, customers have embraced these customer-facing transactions. This technology protects both the consumer and the merchant.
Awareness Is Critical
Being aware of the realities and risks of credit card skimming is critical to protecting yourself against being victimized by skimmers. The more you learn, the better prepared you will be. Take this information to heart, realizing that skimming is a significant problem that can impact anyone. Be mindful of the risks and take steps to avoid being targeted.
