Card skimming is a type of fraud where criminals install skimmers on card readers to steal information from the magnetic strip of cards. FICO is working on actively fighting back against fraudsters by monitoring and reporting on compromised ATM and debit locations in the U.S. through its Card Alert Service.
Debit and credit card skimming fraud activities, which first emerged around 20 years ago, are becoming increasingly common scams in the United States. Card skimming is a major problem, with the FBI estimating that it results in more than $1 billion in losses for financial institutions and consumers annually.
What is card skimming?
Card skimming is a form of fraud where criminals install a device called a skimmer on card readers — such as ATMs, gas pumps, or point-of-sale terminals — to steal information from the magnetic strip of a card. They may also use small inserts in the card reader slot, which are difficult to detect. The skimmers often include pinhole cameras to capture videos of people typing their PIN numbers, though other skimmers rely on a false front on the keypad that captures PIN data.
Once a customer uses a compromised card reader, the fraudster can download or wirelessly transfer the card details, giving them full account access. One of the most dangerous aspects of skimming fraud is that transactions at a compromised location often go unnoticed by the consumer. In fact, the consumer may not even realize their financial information was stolen until fraudulent charges appear or money is missing from their account.
Card Alert Service by FICO
Through FICO’s Card Alert Service, FICO monitors and reports on compromised ATM and debit locations throughout the U.S. Recently, there has been a significant increase in the number of compromised cards.
In the first half of 2022, FICO found a 759% year-over-year increase in compromise events, an increase from 548% in the first quarter. This also represents a 501% increase in the overall number of compromised cards detected, indicating that thieves are utilizing the tactic of skimming card and PIN information.
FICO’s data also reveals notable trends in the location and timing of fraud after a skimming event. More than half of skimming incidents occurred in California, with an additional 23% happening in New York, Pennsylvania, and Maryland. Of the total compromise detected, 63% occurred at a convenience store, and 20% took place at a branch ATM.
Fraud related to skimming often appears quickly after a card is used in a compromised location, with 54% happening within two weeks. Though not a “smash-and-grab” crime, the speed at which fraud happens after a card is compromised shows that criminals are aware they have a limited window to use the stolen information.
Protect yourself from card skimming
Both consumers and financial institutions can take several actions to combat skimming fraud. For instance, financial institutions can use information from Card Compromise Reports and Suspect Reports to quickly block and reissue compromised cards or closely monitor them for fraudulent activity. Both of these reports are available through FICO’s Card Alert Service. Additionally, they can pay close attention to balance inquiries, as 65% of transactions that led to identifying a compromise in the first half of 2022 were balance inquiries.
Consumers can cover the keypad while typing in their PIN to prevent fraudsters from accessing card data and look for any suspicious or unusual features on a terminal.
- Card skimming is a form of fraud where criminals install devices called skimmers on card readers to steal information from the magnetic strip of cards.
- The FBI estimates that card skimming results in more than $1 billion in losses for financial institutions and consumers annually.
- Because of the significant increase in the number of compromised cards in the first half of 2022, FICO started offering a Card Alert Service that monitors and reports on compromised ATM and debit locations throughout the U.S.
View Article Sources
- U.S. Card Skimming Fraud Grows 700+% in First Half of 2022 — FICO
- How To Find Out If Someone Opened a Credit Card In My Name — SuperMoney
- What is Swiping Scamming? — SuperMoney
- Fraud Alerts and Credit Freezes: Options Against Identity Fraud — SuperMoney
- Unknown Charge on Debit Card: What Can You Do? — SuperMoney
- Debit Card Deactivation Scams on the Rise: Don’t Become a Victim — SuperMoney
- 10 Biggest Credit Card Scams of All Time — SuperMoney
- Consumer Credit Card Industry Study — SuperMoney
- Best Personal Credit Cards — SuperMoney