By Julia De Simone
As FICO’S senior director of product management, Debbie Cobb says a highlight of her job is actively fighting back against fraudsters, especially in California where recent data shows that fraud is significantly on the rise.
While swindlers use various methods to bilk people out of their hard-earned money, card skimming is seeing a resurgence after bursting onto the scene for about 20 years. Card skimming happens when a device to capture data on debit and ATM cards is illegally installed at ATMs or on payment terminals at gas stations, restaurants or retail stores. The device reads and records the information on the card’s magnetic strip. Criminals can also use small inserts in the card reader slot, which Cobb says are incredibly difficult to detect.
In the U.S., skimming card fraud grew by nearly 500% in 2022 with a FICO analysis showing signs of faster growth this year. Data shows that more than half (53%) of skimming incidents happened in California, and 63% of the incidents happened at a single brand of convenience store, while only 20% took place at a branch ATM.”
For the first half of 2022, FICO officials found a year-over-year increase in compromised events of 759%, up from 548% in the first quarter. Cobbs states this represents a 501% increase in the overall number of compromised cards detected, indicating that thieves are back to their old tactics of skimming card and PIN information.
Clover Network Inc., a POS system that provides a wide range of hardware options, states on their online blog that skimming credit card fraud has become so bad that it accounted for more than $8 billion in losses in 2020 alone. It details that PIN pad skimming devices have been discovered nearly everywhere, even at some of the biggest and most trusted brands.
The good news is that there are ways to protect yourself when using your debit card, including avoiding swiping your card, inserting it into a card reader, or handing it to a cashier. Experts recommend tapping or holding your card up to the card reader. That’s because cards enabled with tap payment use radio-frequency identification (RFID) to sync with card readers, authenticate card data, and approve or deny the transaction.
Each transaction is encrypted and uses a one-time code or password to secure your card data. This prevents fraudsters from cloning or copying the card since they won't have information such as your name, billing address or three-digit CVV code on the back of the card.
Next time you’re making a purchase, here are some tips to prevent becoming a victim of skimming fraud:
- Inspect the machine to see if anything has been tampered with.
- Try to use bank ATMs as skimming occurs more at privately owned ATMs.
- Inspect the keypad to see if anything looks or feels strange.
- Protect your PIN by putting your hand over the keypad so no one can see your personal identification.
- Use a mobile wallet, such as Apple Pay or Google Pay, instead of swiping your card.
- Go inside a service station to pay instead of paying at the pump.
- Use a machine that is in public and may have a camera because those are less likely to be tampered with.
- Monitor your accounts to see if there are strange charges.
- Get alerts from your online banking apps to help avoid fraudulent transactions.
The FBI also adds when using a fuel pump, run your debit card as a credit card. If that’s not an option, cover the keypad when you enter your PIN. Fuel pump skimmers are usually attached inside the internal wiring of the machine and aren’t visible to the customer. The skimming devices store data to be downloaded or wirelessly transferred later.
“For banks, knowledge is power,” Cobb states. “Using information from Card Compromise Reports (CCRs) and Suspect Reports…banks and other financial institutions can quickly act on known compromised cards for block and reissue or monitor cards more closely for signs of fraudulent activity.”