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EnergyHow credit card cloning works
Filed under: Scams & Fraud
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Card fraud has fallen in the UK, according to Financial Fraud Action UK. The latest figures show that they fell 7% in 2011 compared to 2010, continuing a three-year reduction. In fact, losses are at the lowest levels since the year 2000.Staying Safe Online
However, the amount lost to card fraud last year was still a substantial £341 million. That's £341 million stolen by fraudsters, when the rest of us have to work for a living.
Last week, we saw how this kind of fraud works first hand. My husband received a text from his bank asking if he really was buying £950-worth of stuff in Sports Direct.
Since he was at work (and isn't exactly a fan of sports fashion), it was fairly obviously not him. But what confused us was that his card hadn't been stolen; it was still in his wallet.
And we take card security very seriously. When paying in shops or restaurants, he knows not to let the credit card out of his sight and he certainly hadn't used any disreputable website – the only recent purchases had been booking a holiday on a travel comparison site and paying for a book on Amazon.
So how did these fraudsters do it?
Card cloning 101
It seems most likely that my husband was the victim of a card–cloning scam, probably after using a ticket machine that had been tampered with. This technique is sometimes known as 'skimming' and it allows the criminal to copy the card's electronic data so they can make an exact replica of your card.
Most commonly these gadgets are fitted to cash machines but sometimes criminals working in retail outlets may have them concealed.
The skimming device is fitted over the card slot on the machine and copies the details from the magnetic strip as you enter it.
Usually the criminal will attempt to get the cardholder's PIN at the same time, sometimes by simply looking, but sometimes using a small camera built into the false front.
You can see a video of this kind of scam in action on the LINK website.
Be aware that most ATMs do have a small camera fitted that points behind the person using the machine. These help identify fraudsters and criminals who attack people using the machine.
Take the time to familiarise yourself with an ATM and you'll be better prepared to notice when one looks wrong.
Staying safe
It can be really hard to spot that a cash or ticket machine has been tampered with – these are professional thieves, so the false fronts are unlikely to be obvious. One giveaway is that the area containing the card slot seems to have been moved forwards; this is to conceal the skimming machine inside.
There are other ways to keep as safe as possible. One is to shield the keypad with your hand when entering your PIN, regardless of whether or not someone is behind you.
Don't be embarrassed about asking other people in the queue to stand further back if they are crowding you, and never reveal your PIN even to someone claiming to be from the bank or police.
If the machine swallows your card then call the bank while you're still in front of the machine, if you can. Be cautious of anyone offering to help you if your card has got stuck.
Of course, the main thing to do is check your account statements regularly. My husband's fraudsters were caught when they tried to make a massive purchase. However, before they were caught they had spent over £1,000 through smaller transactions over the preceding week.
Because the amounts were small, the bank hadn't flagged them as suspicious. That means that if my other half had checked his statement more regularly, he might have noticed the fraud sooner.
If you're even slightly worried about the security of your account, or think your card may have been put at risk then contact your provider as soon as possible. They can freeze your account and send a new card out that day.
Smooth transaction
Fortunately, innocent victims aren't left in the lurch when this kind of fraud takes place.
My husband's bank immediately froze the card and opened a separate account. He helped them identify the real debts, which were moved over, so there was no risk that his monthly payment would be unexpectedly high.
But there's no denying that it was an unnecessary faff. There was time spent on the phone to the bank, time spent combing through the statements and the hassle of a new credit card number.
So it's important to keep yourself as safe as possible. Melanie Johnson, chair of the UK Cards Association, said: "This is the third year card fraud losses have fallen - clear proof that our endeavours to fight fraud are packing a punch.
"Customers have also played their part in driving down losses by taking heed of advice about looking after their personal and financial details. Fortunately, they can always be confident that if they are the innocent victim of fraud, they have excellent fraud protection that they don't get if they use cash."
Phishing by phone
But when there's a crackdown on credit card fraud, hardened thieves simply try harder. In fact, many are reverting to old fashioned con-artistry, as the security of card technology improves.
DCI Paul Barnard who heads up the industry-sponsored police squad, the Dedicated Cheque and Plastic Crime Unit, explained: "As technological advances have made our payments more secure, we've seen a spike in more simplistic crimes.
"Many scams involve customers being conned into handing over their cards and PINs, or their telephone banking security details by someone calling, pretending to be their bank or police.
"Our appeal to the public is to be wary of any unsolicited phone calls or emails – never hand over your card and PIN or bank security details in full as neither your bank nor the police will ever ask you for these."
The top 10 scams of 2011
- 1. Mid-contract price hikes<p>It is reasonable to assume that if you take out a mobile phone contract at £30 a month for 24 months that's exactly what you'll pay unless you exceed the tariff. Yet mobile phone providers have come under fire for a snag buried in the small print – a clause to allow mid-contract price rises.</p> <p>Prices are rising by a median of 81p a month and 70% of consumers are completely unaware off this sneaky move, according to Tesco Mobile, so be sure to check any new contracts before you sign the dotted line.</p>
- 1. Land banking<p> Land banking involves plots of land offered for sale, often online, with the promise of sizable returns when planning permission is approved for housing or other development. Yet often the land is located in areas protected from development by planning law.</p> <p> The companies involved soon disappear with investors' money and as the firms are not protected by the Financial Services Authority, their funds are not covered by the Financial Services Compensation Scheme</p>
- 2. Money mule<p> Fraudsters recruit unknowing accomplices through email under the guise of offering employment, seeking a personal favour, or through internet shopping sites. The recruits are persuaded into receiving what are essentially fraudulent payments and then passing funds on.</p> <p> The 'mules' are frequently offered a small financial incentive to encourage involvement and face difficulties in proving their innocence when the fraud is discovered.</p>
- 3. Carbon credit fraud<p> The scams claim to offer people the chance to profit from carbon credits. Under regulations that permit businesses to emit a tonne of CO2 – the companies claim to offer investment in green projects like a forestry scheme or a solar panel project, which generates carbon credits that are then sold on to heavy industry.</p> <p> A flashy brochure or website tells of a reliable 'government-backed' scheme which provides reliable returns for investors. Such a scheme doesn't exist however – a reality investors only discovered when they have parted with their cash and the company is untraceable. As with land banking, fraudulent companies are not covered by the FSA so victims have no course for recompense</p>
- 4. HMRC phishing scam<p> Receiving an email from the taxman saying you are owed a payment may seem like a nice surprise, but it is actually from fraudsters trying to relieve you of your cash instead.</p> <p> The emails provide a "click-through link" to a cloned replica of the HMRC website. The recipient is then asked to provide their credit or debit card details - all the information the criminals need to clear your account, and sell on your personal details.</p>
- 6. Crash for cash scams<p> Insurer Direct Line reported a hike in the number of 'crash for cash' scams last year – where fraudsters fake accidents by making unnecessary emergency stops at busy roundabouts or slip roads, forcing motorists to crash into them.</p> <p> They then make bogus claims to the innocent motorist's insurer, often including fictitious injuries and passengers.</p>
- 7. Driving school scams<p> Learner drivers have been taken for ride by being unknowingly taught by trainee instructors. An investigation by the AA found up to 27,000 extra driving tests have been failed in the last year because one in 10 learner drivers are unwittingly taught by an instructor they do not know is learning on the job.</p>
- 8. One man mail scam<p> July saw the arrest of a Leicester postman who stole £46,686 worth of mail over two-and-a-half years. Yogeshbhai Patel, 38, was jailed for two years for stealing mail including 2,000 DVDs and 2,250 games along with CDs and other electrical equipment. He intercepting the valuable packages and spent the money on living a luxury lifestyle including helicopter rides and a trip to Las Vegas.</p>
- 9. Smart meter scam<p> The Trading Standards Institute reported over 200 cases where elderly homeowners have been targeted by telephone cold callers, purporting to be from their energy supplier and offering energy saving devices which could cut their bills by 40%.</p> <p> The TSI tested the devices in homes where owners had fallen for the scam, only to find they both failed to satisfy electrical safety standards or deliver any tangible energy savings.</p>
- 10. Thermal camera fraud<p> Thermal cameras that track ATM pin numbers are the latest weapon in their arsenal and US scientists have warned it is the next threat for this form of crime. Researchers at the University of California at San Diego found that up to 45 seconds after a person types their pin code into an ATM machine or door entry pad the numbers and even the sequence are still readable by thermal cameras.</p>
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