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Credit card skimming and protecting your money

Simple tips to prevent credit card fraud and how to get your money back if you do get skimmed.

Credit card skimming is a form of card theft where criminals use a small device (or "skimmer") to steal your credit card information from legitimate places of business. These skimming devices can be attached to ATMs or designed to look like a proper card reader.

According to data from the Australian Payments Clearing Association (APCA), counterfeit and skimming fraud in Australia cost just over $2.3 million in the 2021 financial year. Including counterfeit and skimming fraud for Australian-issued cards overseas, the total cost was more than $6 million.

While the bulk of credit card fraud is related to online card theft, it is still a major issue for Australians at home and overseas.

Here, we look at this type of fraud and what you can do to protect yourself against it.

How does credit card skimming work?

Credit card skimming devices can be designed to look like hardware on an existing ATM or like a regular, in-store card reader (for example, an EFTPOS machine). When a credit card is processed through one of these devices, it can capture the details stored on the card’s magnetic strip.

Skimming thieves will later return to download the stolen data of the people who’ve used the tampered ATM or in-store device. With that data, they can create counterfeit clone credit cards or even directly steal money from bank accounts.

It’s worth noting that chip-and-PIN cards are more secure against this type of fraud, as the information stored on the embedded microchip is encrypted. But as these cards also have magnetic strips, there is still some risk of skimming, particularly overseas where chip-and-PIN technology may not be as widely used.

Common signs of skimming devices

Being aware of what to look out for and paying attention to the key signs of skimming can help in the following situations:

  • In-store. Skimming devices in-store are usually separate to the standard card processing machine. This means that if a skimming device is present, your card would be scanned or tapped on 2 separate devices. If you notice such suspicious behaviour, it would be wise to report it to both your card provider and the local authorities. Remember to keep a copy of your police report because you may need it later.
  • ATMs. It can be harder to detect skimming devices at ATMs because they can be skilfully fitted to look like they’re part of the existing machine. Look for signs of tampering or features that don't fit with how the rest of the ATM looks, such as if the keypad is overly raised or looks too shiny and new. Also look out for tiny cameras that could be planted anywhere around the machine (which may be used to capture your PIN as you enter it). If you notice any of these suspicious signs at the ATM, do not use it. Instead report the matter to the ATM owner immediately, as well as the police. If you’ve already used the machine, report it to your card provider as well.

How to prevent credit card skimming

  • Keep your card in sight. Hold on to your card and make sure you are the one to use it – don't hand it over to a member of staff.
  • Never share your PIN. Don't tell anyone your PIN or write it down.
  • Be discreet with your PIN. As well as not sharing your PIN, cover the keypad when you enter in the numbers.
  • Look for signs of tampering. Particularly with an ATM, always check for suspicious features, like loose parts.
  • Avoid outdoor ATMs. While this isn’t always necessarily true, ATMs inside malls are harder to tamper with.
  • Check your credit card statement. The sooner you identify fraudulent transactions, the sooner your account can be frozen.
  • Report suspicious activity. Immediately call your bank, the ATM provider (where applicable) and local authorities if you suspect anything. You can also report it to Crime Stoppers on 1800 333 000 when in Australia.
  • Notify your bank when you go overseas. This will enable your bank to better spot suspicious and/or legitimate transactions. If you’re going away for a long time, it’s also wise to inform them that you’re not planning to use the card for a while.

Credit card features that help protect you against skimming

  • Chip-and-PIN technology. The embedded microchip holds encrypted details about your card which makes it more difficult for skimmers to obtain your information. The PIN also helps verify in-person transactions so that it’s harder for thieves to use your card for fraudulent purchases. As you are not always required to enter a PIN, you should still check your credit card statement.
  • Fraud monitoring services. Most credit card providers have established security systems and in-house fraud monitoring teams that can quickly detect unusual card activity. That’s when you may receive a phone call from them asking if a recent transaction was actually yours.
  • Zero liability. This is a form of consumer protection that all credit card providers are obliged to give you. It means you will not be held liable for fraudulent activities that appear on your account. However, there are certain conditions and exceptions to this which you should note: You are obliged to report any fraudulent activity as soon as you notice it, and you must also take reasonable care to protect your card from loss or theft. Depending on which card you have, there are some other exclusions which can be found in your card policy.

Although these default credit card features are important, doing your part and staying vigilant will save you more trouble. Look out for suspicious activity and always report it immediately.

Where to get help

There is support out there for victims of counterfeit and skimming fraud. The first thing you should do is speak to your bank so it can put the necessary steps in place to prevent any fraudulent activity from taking place. It may also be able to recover funds thanks to the zero liability polices in place.

You should also contact the police in your state, as well as report the scam to the ACCC. There is counselling support available too.

Click here for a list of places you can get help.

Learn more about avoiding credit card fraud, traps and scams

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