Dollars & Sense

Skimming Your Identity: Learn how to guard against this growing crime

Credit and debit cards have made modern payment almost effortless. One quick swipe and the charge is instantly deducted from your account. No trips to the bank, no heavy change to carry around.

Unfortunately the simplicity that makes credit cards so popular also makes them vulnerable to theft. A new method of fraud called "skimming" is becoming increasingly prevalent across the nation, costing credit card issuers the equivalent of more than $350,000 a day.

By becoming aware of the methods that these skimming thieves use you can be better prepared to guard your own identity and credit standing against this growing crime.

How skimming works
An organized system of identity theft, skimming takes advantage of easy access to consumer credit cards and sophisticated technology. This technology allows skim artists to override credit card safety methods such as encoded security numbers and makes skimming a hard crime to trace.

Here's how these identity thieves steal credit information:

1. The Swipe — When a customer hands over their credit card to pay (usually in a restaurant, gas station, or large store), the cashier swipes the credit card through a legitimate payment machine to make the charge.

The cashier can then secretly run your card through a pager-sized device called a "skimmer". This device can read and store the information from more than 200 credit cards at a time. It is estimated that 10-15 restaurants a week around the United States are being identified as harboring skimmers.

2. Downloading — These "gofers" then sell the loaded skimming device to a counterfeiter for around $150 dollars. The counterfeiter downloads the credit card information to a computer.

3. Production — Counterfeiters use the credit information to produce cloned credit cards. Complete with holograms and magnetic strips, these fraudulent cards are often produced and ready to be sold within 24 hours.

4. Distribution — Cloned credit cards are sold for between $400 and $700, depending on the account's available balance. With large and frequent transactions typically over a two-day period, criminals spend an average of $2,800 before discarding the card.

What you can do
Skimming is difficult to prevent because most consumers aren't aware that their identity has been stolen until they receive their credit card statements. TrueCredit's resident fraud expert, Jason Martinez, has these tips for protecting your credit from skimming:

1. Watch your credit card — While it is difficult to spot a skim artist, trusting your instincts can go a long way. "Follow your card when you hand it over to pay. Awareness is key," said Martinez. "If you suspect something, talk to the manager and contact your credit card company."

2. Pay with an alternative — Paying with cash or by check may seem old fashioned but it is a proven method of reducing your chances of credit card fraud. Visiting the ATM may not save you time, but it could save you from a skim thief.

3. Closely check your monthly statements — Review your monthly credit card statements very carefully. "Save your receipts and compare them against your statement," suggests Martinez. "Going through this mini-audit each month will help you spot any unusual activity."

4. Report the crime — If you find any unusual activity, such as unauthorized spending, closed accounts, or a change in address, you should contact your creditors and the credit bureaus immediately. Collecting evidence of the crime (bills, receipts and letters) can help you to clear your record. Read the Guide to Handling Inaccuracies for more information on disputing credit report errors.

5. Monitor your credit — Online credit monitoring is a good way to guard against this complicated brand of identity theft. TrueCredit's Credit Monitoring service alerts you to changes in your credit report by email and provides you with professional fraud resolution assistance if your identity is stolen.

The credit industry is doing all it can to develop security methods that prevent this crime. Until high tech safety devices like fingerprint scanners and microchips hit the credit card market, your own awareness is the best way to guard against this crime.

Take charge of your credit and guard against identity theft using TrueCredit's family of credit information and analysis tools.

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