A one-time victim of identity theft, I'm all too familiar with the residual headaches of losing control of your critical personal information. So I pay particular attention anytime a new scam surfaces -- like the recent debit-card skimming scheme at Michael's Stores, a national chain of specialty shops.
| More from CBSMoneyWatch.com: |
• 5 Reasons Debit Cards Are Dangerous
Biggest College Money Mistakes
• 6 Tricks: Never Pay an ATM Fee Again
OK. Skimming isn't actually new. It's been around for a few years. But until now it's mostly been practiced at gas stations and remote ATMs. Today, it's everywhere and growing.
Skimming has become the identity theft of choice for many crooks. You have a one-in-five chance of being a victim; losses will total about $1 billion this year. Other forms of identity theft include dumpster diving, phishing and pretexting. But skimming generates far quicker and richer rewards for perps, who essentially gain immediate access to cardholder bank accounts.
At Michael's Stores, thieves managed to hack the debit-processing equipment at 80 locations in 20 states. They were able to instantly duplicate customers' cards and begin making cash withdrawals from the associated bank accounts, $500 at a time.
How did they do it? The crooks tampered with debit-card processing equipment at the point of sale, inserting a tiny device into the store equipment that enabled them to read the magical magnetic strip on the debit card as it was swiped. Evidently, a pinhole camera then recorded customers as they entered their PIN.
This is a frightfully difficult crime to defend against. Technology has advanced to where miniscule cameras and card reading devices are virtually undetectable. Some devices allow criminals to download the information stored on skimming devices remotely without even having to retrieve the device. You might consider just using a credit card, which has greater protections.
Young or old, if you are going to use a debit card you need to take precautions. Here's how:
1. Cover your PIN. Your bankcard won't work without the PIN. Thieves usually obtain the PIN with a small camera stationed near the card processor. So keep an eye out for anything that seems out of place. It might be a camera. In any event, shield the keypad with your body or free hand when entering your PIN.
2. Be selective with your ATM. Again, look for anything out of place. Any wires exposed? Tape evident? Hardware loose? If so, find another ATM. Use an ATM inside a bank whenever possible. Stay away from ATMs in remote locations or that appear seldom used. These are easy to tamper with and might even be dummy cash machines.
3. Leave some wiggle room. When you insert your card, wiggle it while it's in the slot. If something seems loose, there might be theft device attached to the swipe hardware. Wiggling the card might jar the theft device from its hiding place.
4. Monitor your accounts. One of the best protections against continued use of your stolen information is to check bank statements regularly. With a debit card, you may be responsible for the first $50 and you must report theft within two business days of discovery and no later than 60 days after the theft for protection. Credit cards have more protections and might be a better choice if you have any reservations about an ATM or processing machine.
5. Look for security cameras. ATMs and gas pumps that are under video surveillance and have cameras aimed directly at the card readers are less likely to be fitted with card-skimming equipment.
6. Keep an eye on your card. When you give your card to a waiter or clerk, be skeptical of any request to swipe it through multiple devices or if they must leave your sight.
7. Be careful at the gas station. Gas stations are among the most prone to skimming. Use a credit card or choose the credit option on your bankcard.