What is credit card skimming and can you prevent it?

February 4, 2020

Learn all about credit card skimming and what steps you can take to avoid it

A man using a credit card to pay at a gas station

Credit card fraud has been around for as long as credit cards themselves, and while banks work to protect our transactions, thieves never sit still. Today, a practice called "skimming" is used to steal our cards without ever laying a finger on them. But what is credit card skimming and how can you prevent it? Read on to learn everything you need to know!

How does credit card skimming work?

Skimming, or credit card skimming, is a practice used to steal valuable card details wherever the magnetic strip is used. Unlike online credit card fraud, which involves password cracking and hacking, this process takes place at the point of sale.  

Skimming employs specially made electronic devices to steal card information. At an ATM, it might be designed to mimic the face of the card insertion slot. At a gas pump, it might be a false card reader that slides over the real one. In either case, these devices are meant to mimic real card readers and can record information such as your CVC code, credit card number, and cardholder name.

ATM skimming might also use fake pin keypads or even place small cameras to spy on your fingers as you input your pin. In any case, once your card information has been stolen, the thieves use it to essentially create a duplicate or clone. They can then make a withdrawal from an ATM, purchase goods at a retail store, and even make transactions online. Because the card uses the same information as a real card, it can be difficult for a credit card company to detect fraudulent purchases.

What can you do to protect yourself from credit card skimmers?

Learn how to identify a credit card skimmer 

One of the best ways to protect yourself is to learn how to spot a card skimmer in the wild. While skimmers are design to blend in, they aren't always perfect. They can protrude off of the scanner they are covering or have a slight variation in color, texture, or materials. If you're in doubt, check other terminals and compare the shape of the card readers. If something seems strange, trust your instincts and find another.

Because skimmers are typically only lightly held in place, they can often be removed without much effort if you have the foresight to check. Before using a magnetic card reader, give it a firm jiggle to see if anything comes loose. You can also check keypads to see if they are thicker than they should be or move abnormally when pressed.

Finally, you can check to see if there is a broken security seal. Many ATMs and gas pumps have an adhesive plastic seal that's placed across any surface that can be opened for routine maintenance. These are specifically put in place to prevent tampering, so if it's broken, you can be fairly sure that someone is up to no good.

If you do find a skimmer or a broken security seal, it's essential that you notify the staff. If you're right, you could potentially save hundreds of people from fraud.

Other ways to protect yourself from skimming

In addition to recognizing a skimmer, there are several other practices you can adopt to keep your valuable data out of a criminal's hands.
Cover your pin - As mentioned earlier, some thieves will put small cameras near pin pads. You can easily thwart their schemes by using one hand to cover your other as you input your pin.

Use a card with an chip - Because skimming devices only work with a magnetic strip, using a card with an EMV chip (or simply "chip") is a great way to protect yourself. Inserting these cards into the terminal is called "dipping" your card (as opposed to "swiping" with a magnetic strip).

EMV chips use a process called "tokenization" to protect your card's information. Instead of transfering your actual card data during the transaction, it creates a one-time token that acts as a placeholder while the real data is kept on a secure server. This means that anyone trying to steal your card will get a useless token instead.

Use a card with NFC or "contactless card" - Some newer chip cards feature Near Field Communication (NFC) technology, which allows you to simply touch your credit card to the point-of-sale terminal. Because NFC only works within a very short area, and because you don't have to "dip" or "swipe" your card, this is a very safe method of payment. Like standard EMV chip cards, contactless cards employ tokenization as an added layer of security.  The only downside is that many stores haven't installed compatible point-of-sale systems yet, so you'll often have to revert to the "dip" method.

Use a digital wallet - Digital wallets, like Google/Apple/Samsung Pay, are a relatively new way to use credit and debit cards. Like a contactless card, these methods take advantage of your smartphone's NFC capabilities. Your credit cards are never stored on your phone, but are encrypted and stored in the cloud. When you're ready to pay, tokenization is used to make sure your credit card number is never actually shared.

Unfortunately, not every store has registers capable of utilizing digital wallet payments, and those that do don't always support all of the various services. For example, a store might accept Apple Pay, but not Samsung Pay. Stores typically have signs in their window or stickers on the register that indicate if they accept digital wallet payments. 

Use cash - As the saying goes, cash is king. While not as convenient as some of the other methods listed (and perhaps not as safe in other ways), you can be certain that your credit cards won't be skimmed if you use cash instead.

Don't use ATMs outside your bank - ATMs in public places, like parking lots, are prime targets for these sorts of scams. However, ATMs within your actual bank are much less likely to have been tampered with.

Withdraw money from a teller - If you'd rather not trust an ATMs, withdrawing money from a bank teller is the safest bet.

Pay cashier for gas - Similarly, if you're worried about being unable to spot a skimming device at a gas station, consider paying the attendant inside the store.

How do you know if your credit card has been skimmed?

Because transactions made with skimmed credit cards closely resemble the real thing, it can be difficult for banks and credit card companies to notice. However, if your bank offers fraud detection or fraud alerts, it's never a bad idea to sign up.

If you think that you might have accidentally used a card reader that has been tampered with, it's important to contact your bank as soon as possible. Alerting them to suspicious activity can save you from future headaches.

Finally, it's always a good idea to frequently check your account balances and transaction history. The sooner you're able to spot strange activity, the sooner you're able to prevent it from getting out of control. Fortunately, most credit cards and banks make this easy with online account access and even mobile apps.

Paying with a credit card at a credit card reader

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Read more: While you certainly need to watch out for credit card skimming in the real world, the internet can be dangerous, too. Read our blog about how to avoid credit card fraud online!

by Geoff Ullrich

About the Author

Geoff Ullrich is a writer and Content Marketing Specialist at Germania Insurance.