Debit Card Skimming Scams

Debit-card 'skimming' scams

Three steps to take to protect your account data from getting into the wrong hands

VIDEO:

Debit Card Theft

 

Whetherby choice or necessity, American consumers are increasingly relying ondebit rather than credit cards. Debit purchases for 2008 are expectedto have increased by 13 percent, to a total $1.2 trillion. Thatcompares with a rise of only 3 percent, to $1.9 trillion, for creditcards over the same period, according to the Nilson Report, anewsletter that tracks the consumer payment industry.

Whenyou use a debit card, the money is immediately taken from your checkingaccount. While using debit guarantees you that pay as you go, thesecards have downsides, including a growing appeal to thieves. "Aseconomic conditions have worsened, there's been a noticeable increasein all types of card fraud," says Avivah Litan, an analyst specializingin fraud detection and prevention at Gartner Research in Stamford,Conn. "But ATM and debit-card fraud is the top area of concern we'rehearing about from banks all over the world."

Unlikecredit-card thieves, who usually charge merchandise and then resell itto come up with money, people who create counterfeit ATM or debit cardsby stealing your PIN and other account data can simply pull cold cashfrom your bank account. Using a technique known as skimming, they setup equipment that captures magnetic stripe and keypad information whenyou input your PIN at ATM machines, gas pumps, restaurants, orretailers.

Here's how you can protect yourself:

Don't type in your PIN at the pump (or into a web browser!)

Beespecially vigilant at gas stations, Litan says. "Gas pumps arenotorious for skimming because they're produced by only a couple ofdifferent manufacturers, and if someone gets the key to one from adisgruntled employee, they can insert a skimming device inside the pumpwhere it can't be seen," she says. She recommends using a credit cardrather than a debit card when you fill your tank.

Ifyou must use a debit card at the gas pump, choose the screen promptthat identifies it as a credit card so that you do not have to type inyour PIN. The purchase amount will still be deducted from your bankaccount, but it will be processed through a credit-card network, whichwill give you greater protection from liability if fraud does occur.This is because card issuers typically have "zero liability" policiesfor both debit and credit cards, but sometimes exclude PIN-basedtransactions from that protection.

Editor's Note:  As the PIN Payments News Blog reported last January, (Triple DES for GAS)  Visa has mandated that all new gasdispensing machines must support Triple DES effective January 1st.  Forexisting machines, Triple DES must be implemented into pay at the pumpstations by July,  2010.  So, if your gas station has NEW gas dispensing machines, your good to go...otherwise heed this advice until 7/10!

Visa'snew requirement calls on gas retailers to ensure that all new pumpscapable of processing debit card purchases are equipped with anencrypting PIN pad, or EPP, that supports 3DES

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