Credit card skimming and protecting your money
8 simple tips to prevent credit card fraud and how to get your money back if you do get skimmed.
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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 the Australian Payments Clearing Association (APCA) 2015 Fraud Report, domestic counterfeit and skimming fraud cost Australians $6.4 million that year (out of the total $168.8 million Australian-issued card fraud that took place domestically). The same report states that international counterfeit and skimming fraud on Australian-issued cards cost $28.1 million in the same period (out of the $269.1 million Australian-issued card fraud perpetuated worldwide).
While skimming may seem like a small drop in the ocean of other fraudulent card activity (the bulk of which relates to online card theft), it is clearly still a major issue for Australians both domestically and even more so when travelling 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 (e.g. 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 all 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 two separate devices. If you notice such suspicious behaviour, it would be wise to report it: both to your card provider and to 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. You should always look for telltale signs of tampering, including scratches around the card slot, an unfamiliar or odd-looking card slot or any other features that don’t seem right, like if the keypad is overly raised or looks too shiny and new compared to the rest of the machine. 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
Here are some things you can do to protect yourself from card skimming:
- Keep your card in sight. If you’re in a store or restaurant, make sure you hold onto your card or keep it within your sights at all times so that you know it is only being used on the one machine.
- Never share your PIN. Don’t tell anyone your PIN, don’t write it down and definitely do not keep a copy of it in your wallet together with your card.
- Be discreet with your PIN. As petty as it might sound, covering the keypad as you enter your PIN could help prevent someone stealing from you.
- Look for signs of tampering. Before you use an ATM, always check for any suspicious features. Also try wiggling parts of the machine, because legitimate ATM machines are solid constructions that don’t usually have loose or moving parts.
- Avoid outdoor ATMs. While this isn’t always necessarily true, an ATM inside the mall is generally safer than a lone outdoor ATM on the street, as it harder to tamper with.
- Check your credit card statement. Checking your credit card statement is a good habit, and it’s now easier to do this regularly thanks to online banking. Doing this is important because you can identify fraudulent transactions as soon as they happen, and your account can be frozen to prevent more theft.
- Report suspicious activity. Immediately call your bank, the ATM provider (where applicable) as well as the local authorities if you suspect your account has been compromised. You can also report it to Crime Stoppers on 1800 333 000 when in Australia.
- Notify your bank when you go overseas. Letting your bank know where you are will help them identify legitimate transactions you make when you’re abroad. It can similarly help them detect suspicious activity, and allows them to contact you if they want to verify a transaction. If you’re going away for a long period of 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
Certain default features already help safeguard your account against fraud:
- Chip-and-PIN technology. Requiring both a chip and PIN to authorise transactions on your card makes it doubly hard for fraudsters. The embedded microchip holds encrypted details about your card that make it more difficult for criminals with 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. However, you are not always required to enter a PIN, so you should still check your credit card statement as well.
- 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. Zero liability is a form of consumer protection that all credit card providers are obliged to give you. This means that 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.
Finally, although these default credit card features can be a real lifesaver when it comes to card fraud and theft, doing your part and staying vigilant will save you more trouble. Look out for suspicious activity and always report it immediately because it’s definitely better to be safe than sorry.
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