Gift card stripping, credit card skimming, and micro-charges, oh my! Holiday shopping isn’t just about bright lights, soft Holiday music, and that jolly old Salvation Army Santa ringing his bell. As consumers hit the malls, another type of Holiday of pixies is waiting, and they are not as friendly as Santa and his crew.
Credit card scammers are getting ever more sophisticated, and while credit card theft can still be as simple as someone taking off with your purse, for the most part credit card fraud has become much more insidious—and often harder to detect.
According to a newly released report from the online Shop Smart Magazine, credit card fraud is on the rise, with reports to the National While Collar Crime Center and FBI-sponsored Complaint Center increasing 22 percent last year alone. So, before you head out to make the Season merry, read up on scams—some new, some old—to be looking out for.
Gift card stripping. Gift cards are a popular gift with friends and family; they are quick and easy to get, and you never have to worry about whether the recipient will like your present! However, a new type of scam could leave the receiver with nothing but a bunch of zeros.
Gift card stripping is a one of the newest tricks on the block. Scammers use a handheld scanner, which can easily be purchased online, to read the magnetic strip on gift cards displayed on store racks. Combined with the number on the front of the card, this gives fraudsters all the information needed to use the funds loaded on the card, once the gift card gets sold to an unsuspecting customer.
All the thief has to do is call the 800-number on the card every few days to check if money has been loaded on to the card. So, while that gift card for Aunt Jeanne is lying nicely wrapped up under the tree, scammers could be out loading up on holiday presents for themselves with the money loaded on the card.
To avoid this risk, experts recommend purchasing gift cards that are inaccessible to other shoppers, such as online gift cards or gift cards kept behind the customer service desk in stores. Also be sure to inspect gift cards before purchase for signs of tampering.
Credit and debit card skimming. Credit card skimming has been around for a while, but it’s becoming increasingly common. It is similar to gift card stripping, in that electronic devices are used to skim off information from credit cards or debit cards.
Skimming devices are typically attached to ATMs or gas pumps, carefully concealed to look like they are part of the ATM or pump. When unsuspecting consumers swipe their cards, the information stored on the magnetic strip on the back of the cards is captured by the skimming device. Fraudsters often use a hidden camera or a transparent plastic PIN pad overlay as well to capture the PIN information as the consumer types it in.
To minimize your risk, stay clear of non-bank ATMs, which are often located in less secure places where they can be more easily tampered with. Always check the machine first to see if something looks unusual, particularly around the card slot.
Micro-charges. How many $10 charges does it take to make $10 million? Yes, one million, of course, and you may think that that would be a task too daunting for any fraudster to take on. But in these days of automated credit card transactions, that’s exactly what some thieves are doing.
In June of this year, the Federal Trade Commission busted up one such scam, in which a fraud ring had racked up more than $10 million in bogus micro-charges, ranging from as little as 20 cents to $10, before they were caught. The idea, of course, is to make the charges so small that consumers will overlook them or not bother checking them out when they look through their statements at the end of the month.
To avoid this, carefully check both credit card statements and bank statements each month, and follow up on any charge you don’t recognize. Credit cardholders are not liable for fraudulent charges, as long as they are reported no later than 60 days after the charge appears. With debit cards, you need to be more vigilant: to be fully covered, the cardholder must report the problem within two days after noticing it, otherwise he or she could be liable for up to $500 in fraudulent charges. Debit cardholders who don’t report fraudulent charges within 60 days after the statement has been mailed stand the risk of losing all the money in the account, should fraudsters later come back and pull all the funds from the account.
In short, in today’s digital era with cyber credit card fraud and identity theft on the rise, guarding your valuables has taken on a whole new meaning; it’s no longer enough to simply never let your wallet out of sight. Still, with a little bit of caution and alertness, most risks can be avoided.