Editorial Policy

Protect Yourself from Credit Card Skimming

Eva Norlyk Smith Ph.D.

July 25, 2013

In the age of electronics, pickpockets don't need to steal your wallet to get to your credit cards.

Instead, they can install devices called skimmers on ATMs and gas pumps, and even infect retailers' computers with skimming software, to lift your credit card information. In fact, as electronics get smaller and cheaper, skimming is on the rise.

According to a March 2013 study by FICO labs, skimming incidents increased in 20 states in 2012. The Northeast is a bit of a hotspot, with Maine, Massachusetts, New York, North Carolina, Pennsylvania, Vermont and Virginia also showing an increase in skimming. Florida and California were hit hard as well. The largest jump was seen in South Dakota, where credit card skimming incidents spiked by more than 25 percent.

To protect yourself, you'll need to understand the crime — and keep a watchful eye on your accounts.

How skimming works
Credit card skimming comes in many variations, but all involve siphoning off data from the magnetic stripe of your credit card to clone the card. When the victim 's card is swiped, the skimmer records the information encoded in the card. The thief can then sell this information on the Internet, and those who buy it can make counterfeit cards or online purchases.

In some instances, skimmers will “contract” with workers at restaurants or fast-food stores. These workers are given hand-held skimming devices and are paid for each card they skim. In other instances, thieves attach electronic skimmers to gas pumps and ATMs. In the case of ATMs, fraudsters often install hidden cameras as well to record the PIN as the cardholder punches it in.

According to the FICO study, 46 percent of the skimming incidents in 2012 took place at bank ATMs, and another 18 percent at non-bank ATMs. A little more than one-third of incidents took place at retail point-of-sale terminals, including restaurants and gas stations. This is a shift from 2011, when 79 percent of skimming activities focused on retail terminals (mostly due to a large multi-state crime ring that has since been shut down).

As technology improves, thieves may find it even easier to steal your money.

“It's the classical electronic trend — the electronics needed are getting smaller, cheaper and more sophisticated,” says John Buzzard, manager of the FICO Card Alert Service. “Criminals don't even have to go into the stores anymore. They can inject malware remotely into unprotected retailer computers or into the point-of-sale system. So it can all be done by some guy sitting in his basement.”

Protect yourself
Credit card losses from fraud are generally covered by card issuers, but you'll still want to avoid the stress of having your credit card information stolen and having to replace your card. To lessen the chance of becoming a victim, follow these three steps:

1. Monitor your credit card account.

“These days, you need to stay really tuned in to your financial accounts, so you always know what's happening” says Buzzard. “Your monthly paper statement shouldn't be the only time you check up on your accounts.”

Buzzard recommends signing up for automatic account alerts on your card issuer's website. You can sign up for daily or weekly text , alerts about withdrawals over a certain amount, or regular card balance updates.

2. Trust your instincts. To protect yourself from credit card skimming in the first place, use common sense. Avoid letting your credit card out of sight (pay for each drink rather than running a tab at a bar, for example). When using ATMs or gas pumps, keep in mind that skimmers are typically fitted to the slot where you insert your card. Before using your card at one of these machines, inspect the card slot. If it sticks out, is loose or attached with tape, do not insert your card.

“If you're in a situation and something just doesn't seem right, go elsewhere,” Buzzard says. “Your personal safety is more important.”

3. Know if you're in a hotspot. Increasingly, credit card skimming is organized in rings, and if you live in a hotspot area, there's extra reason to be on the alert. To see whether your area is affected, check out this credit and debit card fraud map, which lists fraud trends based on data collected by FICO. The map shows in which states card fraud has increased or decreased and the areas that are particularly affected, as well as which type of skimming (retail, bank ATM, or non-bank ATM) is prevalent in that area.