Know the Basics about Card Skimmers and Their Affect

By:  Dorothy Riggs, CFE

It’s important that merchant employees and cardholders possess basic knowledge about card skimmers in order to mitigate financial loss to card issuers and cardholders and to thwart reputational loss to merchants.

What is a card skimmer?

A skimmer is an electronic device that captures card data.  Card data thieves install the small devices onto or into card terminals at various merchants.  Gas pump terminals and ATMs are among their preferred targets.  Unscrupulous employees at restaurants and the like have also been known to use skimmers to steal card data.

What do card data thieves do with the stolen information?

Card data thieves often sell stolen card data on the black market, where buyers load the data onto plastics and create counterfeit cards.  The counterfeit cards are then used to load funds onto gift or prepaid cards and to purchase varied goods.

How am I affected by card skimmers?

If you’re a consumer and your card data is stolen, you are likely to find unauthorized transactions on your account statement.  Not only does this diminish funds available to you during a specific timeframe, it affects your time availability to manage your daily tasks, because at some point you must carve out some time to report the unauthorized account activity to your card issuer and follow the necessary steps to obtain reimbursement.  It may also be an inconvenience if there’s a lengthy lapse before you receive your newly issued card because the compromised card should be closed or blocked in order to prevent ongoing unauthorized transactions.

If you’re a financial institution card data breaches often cause significant financial loss.  In some cases cardholders who don’t fully understand skimmers or card breaches in general, associate the breach of their card data to the card issuer.  This can result in consumer confidence issues for the financial institution.

When specific merchants are confirmed to be the point of compromise for a card breach and it is publicized, those merchants may also experience consumer confidence issues because some cardholders may be cautious about making future card transactions with the merchant.

As a consumer, how can I protect myself against the affects of card breaches?

• Closely examine card terminals for abnormalities prior to inserting your card.  Abnormalities include, but are not limited to the following: 

1. The terminal looks slightly different than surrounding terminals.
2. If your card can be pushed in so far that you can’t easily put your thumb on the end of it, the terminal may have been tampered with.

• Keep your eye on your card at all times, particularly at restaurants to make sure the waiter doesn’t switch cards or capture your card data.
• Examine your account activity or statements as frequently as possible, at least once per month.  Report unauthorized transactions to your card issuer immediately.
• Don’t share card, account or personal identification data with unknown individuals or entities.