Member Benefits

The evolving world of skimming fraud
Is card fraud coming from inside your business?

Skimming is generally defined as capturing magnetic stripe data by swiping a legitimate card through a small hand-held device about the size of a pager. The captured card data is then used to re-emboss and/or re-encode fraudulent cards with “real” data.

Advanced technology and sophisticated hardware have caused resurgence in this tried and true method of card fraud. Inexpensive skimming devices can be acquired easily on the Internet, and secondary markets are becoming more prevalent for skimmed data and counterfeiting.

Criminals have expanded their point-of-sale attacks beyond the traditional targets (restaurants, full-service gas stations) to a wide range of retailers, particularly smaller merchants who may not be well equipped to prevent this type of crime.

A recent account of a skimming ring that was broken up tells of two employees who stole data from hundreds of cards by simply swiping the cards twice -- once through the merchant’s legitimate terminal and then a second time through the skimming device. The stolen information was transmitted from a home PC over the Internet to a middleman who in turn sold the information to a group making counterfeit cards in another state.

Another new technique used by criminals is to replace legitimate payment terminals with equipment that records the card data fraudulently.

Protect your business and your customers
Here are some practices recommended by the experts:
1. Familiarize yourself and your point-of-sale staff with your payment terminals. In this way you will be more likely to recognize equipment that has been replaced or tampered with.
2. Ensure that your hardware and software are updated so as not to store cardholder data after a transaction has been processed.
3. During each transaction, compare the name printed on the receipt with the name embossed on the card. Additionally you can check the cardholder’s ID to ensure that the name on the card matches.
4. Require staff to keep a customer’s card in clear view at all times.

You could earn a reward
The major card associations are in agreement that the growing trend of skimming needs to be brought under control. Visa currently offers a reward of up to $1,000 for information leading to the arrest and conviction of persons involved in the manufacture or use of counterfeit cards.

Skimming is a crime that affects merchants and cardholders alike. Cardholders, unaware that their critical information has been stolen, will discover the unauthorized charges only after the criminals are long gone. And it is yet another avenue by which fraudulent cards are brought into circulation. If you are ever suspicious, call Customer Service and report the incident to law enforcement authorities.

For more information on this and other issues concerning bankcard processing, call First Horizon Merchant Services and mention your membership with the association, 1-800-894-8600.

Submission by First Horizon Merchant Services.

Reprinted from Floor Care Professional, March 2007