Credit Card Skimming: How It Works and How To Avoid It

Written by experts Pat Collins and John Halloran.

What Is Credit Card Skimming?
Credit card skimming is theft: thieves use a device known as a ‘skimmer’ to steal the data off a credit card. This data includes information stored on the magnetic strip of your card, like your full name, the expiry date of your credit card, and the credit card number.

Anyone previously affected by credit card skimming understands just how confusing this type of theft can be. Victims of this type of fraud feel blindsided; they notice that money has been withdrawn from their account, or fraudulent charges appear on their statement, but they know their credit and debit cards have always been in their possession. How could this theft have occurred?

We sincerely hope you have never been a victim of credit card skimming. These tiny, illegal devices slip over the top of a real credit card reader and, because they blend in perfectly with the rest of the machine, they can be almost impossible to detect.

How Credit Card Skimming Works
When you slide your credit or debit card into an ATM or other point of sale, the card skimming device reads the data on the magnetic strip of your card. The thieves now have all the information they need to use your card for fraudulent transactions; they also sell this valuable stolen data and use it to create counterfeit cards.

Credit Card Skimming at ATMs and Gas Stations
Skimmers can be placed over practically all types of credit card readers, but they’re more commonly discovered on ATMs and at gas stations. Thieves have also been known to place undetectable cameras near ATMs so your pin can be recorded as you enter it.

Aside from these two locations, these skimming devices also appear at parking meters and ticket kiosks, basically any place a credit or debit card can be swiped. They’ve even been discovered in restaurants where an employee equipped with a handheld skimmer has stolen information from cards when conveniently out of sight of the diner.

Skimming at Restaurants and Retail Outlets
It’s not unknown for retail and restaurant workers to be recruited to a skimming ring. These people handle credit cards on a regular basis, using a handheld device during a transaction to obtain your details. Most of us have been in a restaurant and handed our card over to the waiter to pay the bill. This action is typically a safe one – the waiter walks away with your card and the transaction takes place; however, for dishonest waiters this is the ideal opportunity (and the opportunity they’ve been waiting for) to swipe your card through a skimmer and no-one is the wiser.

How Your Stolen Information Is Used
Data skimmed from your credit or debit cards is typically used by thieves for the following purposes –

• To make over-the-phone, in-store, or internet purchases,
• To transmit to other countries where the data is used to create counterfeit cards; or
• To carry out identity theft, whereby the criminal uses your information to take out a loan or set up an account in your name.

Unfortunately, if you used a debit card to make a purchase, the thieves may also have your PIN (personal identification number) so they can now drain your bank account. They do this by installing a fake keypad over the real one, which enables them to capture the PIN; alternatively, they install a minute camera which watches you as you enter your PIN. The thief now has all the data he needs to withdraw cash from your checking account – or to create fake cards.

Credit card skimming victims are usually not aware of the theft until something unusual occurs, like –

• Their card is unexpectedly declined,
• They notice their bank account contains unauthorized charges, or
• They receive a notification in the mail.

How Difficult Is It To Spot A Credit Card Skimmer?
A credit card skimmer can be difficult to spot because many look just like regular card readers; however, it’s all about being aware and being vigilant.

• Let’s say you notice a card reader doesn’t look the same as others at the same location, for example, one that’s larger than the others at nearby gas pumps – you may have spotted a skimmer.
• Also, a reader with an attached card skimmer may not feel very secure – there may be a skimmer attached if you’re able to wiggle the reader.
• Another indicator is a reader that sticks out way past the panel; skimmers are supposed to fit neatly over the credit card reader. You may feel suspicious, feeling that an additional part appears to be affixed to the card reader.

Typically, though, a clever card skimming device will blend in with the machine it’s being used on and it’s highly likely you won’t notice anything different.

Being Vigilant is Key
Keep your eyes open for credit card skimmers wherever you swipe your credit card, remembering that the ATMs most likely to be altered are at remote ATMs and at gas stations. If you’re concerned at a gas station, compare the suspicious reader to others at nearby pumps. Alternatively, don’t pay at the pump – go inside, or leave and go to another gas station.

The best way to protect yourself from skimmers is to become familiar with the look and feel of regular card readers – that way you’ll know when something is off.

Gas Station Warnings
You may not be aware that there’s often a security label placed across gas pumps that advises if the cabinet panel on a fuel dispenser has been altered. When undamaged, the label has a blue, red, or black background, but if the seal has been broken you’ll see the words “Void Open’ in white. If you notice that this message is displaying, or the seal is loose or missing altogether, be aware that an unauthorized person has accessed the cabinet. Do not use the credit card machine at that pump, and advise the attendant at the service station.

We suggest taking a few moments to inspect every credit card machine prior to using it. Most of us don’t do this, but we simply can’t afford to be complacent because there’s potentially a lot on the line here and we don’t know what state the machine is actually in.

This is not only a warning about card skimming devices; some thieves capture your keystrokes by placing a fake keypad on top of the real one. Now they have the ability to capture your credit or debt card details, and your pin or billing zip-code. So, if you notice that the keys are unusually hard to push, eject your card and go to a different ATM. It’s also safer to use a bank-operated ATM instead of an ATM at a gas station or other type of store.

Help! I’ve Been Skimmed – What Should I Do?
Contact your credit card issuer, or your bank, the moment you discover you’ve become a victim of credit card skimming – whether you’ve noticed any fraudulent charges or not. It’s vitally important that you report your suspicions as soon as possible because you need to be protected from the liability of unauthorized transactions and charges. To protect yourself, you need to provide as much information as you can regarding the location of the skimmer, like the ATM location or the pump number of the gas station you visited.

In addition, immediately alert the Federal Bureau of Investigation and the Federal Trade Commission. These two government agencies have been very successful in breaking up large credit card skimming rings.