How Credit Card Skimming Works

Thieves Use Credit Card Skimming to Steal Your Data

A woman using an ATM
© Thanasis Zovoilis / Creative RM / Getty

Victims of credit card skimming are completely blindsided by the theft. They notice fraudulent charges on their accounts or money withdrawn from their accounts, but their credit and debit cards never left their possession. How did the theft occur?

How Credit Card Skimming Works

Credit card skimming is a type of credit card theft where crooks use a small device to steal credit card information in an otherwise legitimate credit or debit card transaction.

When a credit or debit card is run through a skimmer, the device captures and stores all the details stored in the card's magnetic strip. Thieves use the stolen data to make fraudulent charges either online or with a counterfeit credit card. In the case of ATM and debit cards, thieves withdraw cash from the linked checking account. The stolen card details may even be sold over the internet.

Credit card skimmers are often placed over the card swipe mechanism on ATMs and gas stations. With ATMs, the crooks may place a small, undetectable camera nearby to record you entering your PIN.

Occasionally, certain retail and restaurant workers who handle credit cards are recruited to be part of a skimming ring. These workers use a handheld device to skim your credit card during a normal transaction. For example, we routinely hand our cards over to waiters to cover the check for a restaurant. The waiter walks away with our credit cards and, for a dishonest waiter, this is the perfect opportunity to swipe the credit card through a skimmer undetected.

Victims of credit card skimming are often unaware of the theft until they receive a billing statement or overdraft notices in the mail.

How to Prevent and Detect Credit Card Skimming

Credit card skimming incidents can be difficult to detect. Since your credit card is never lost or stolen, The best way to detect a skimmed credit card is to watch your accounts frequently.

Monitor your checking and credit card accounts online at least weekly and immediately report any suspicious activity. Here are a few more tips for avoiding credit card skimming.

  • Watch where you shop. Restaurants, bars, and gas stations seem to be the places where credit card incidents happen most frequently. That's because cardholders are comfortable letting their cards leave their sight in these places. But, if you can't see your credit card, it could be getting skimmed.
  • Know how a credit card skimmer looks. Krebs on Security has a few pictures of credit card skimmers that demonstrates how difficult it is to detect the devices, which have become smaller and more difficult to detect over the years.
  • Check ATMs before using them. At ATMs, skimmers often place a camera within view of the keypad to steal your PIN. Or, they place a fake keypad on top of the real one to record your keystrokes. When you're using an ATM, cover your hand as you type your PIN to keep a camera from catching a view of what you're typing. If the keys seem hard to push, eject your card and use another ATM.
  • Don't become a victim of "credit card cleaning" scams, where thieves claim to clean the magnetic strip on your credit card. These thieves simply swipe your credit card through a credit card skimmer and take your credit card information.

How to Report a Credit Card Skimming Loss

Contact your bank or credit card issuer to let them know that your credit card information has been compromised. Call first, then follow up in writing. If only your credit card information has been stolen, you won't be liable for any fraudulent charges.

Place a fraud alert on your credit report. This forces businesses to confirm your identity before approving applications in your name.

Alert the Federal Trade Commission. They often work to break up large credit card skimming rings. Your complaint will help catch the thieves.

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