What is Credit Card Skimming?

Basically, skimming is a type of credit card fraud. The fraudsters install a device called skimmer on ATMs or other payment terminals. While you are using a machine, the skimmer steals all the information put on the magnetic stripe on your credit card. The EMV chips on the magnetic stripe can protect you from the skimmer, when you are taking out cash or are making payments. The chip contains a dynamic CVV Security Code, which changes after each transaction. Therefore, if a fraudster skims your information, he still misses all the digits that he would be needing to counterfeit a card, which is known as ‘card-cloning’.

  • Online on Card-Not-Present (CNP) Fraud

The chip can’t stop transactions made on CNP. In that case, the information on the stolen credit or debit card can be used to make purchases online. While shopping online, you are prompted to mention the CVV security code on the front or the back of your card and then check out. You can’t see the number on your magnetic stripe. This number does not change.

  • Phishing Scam

Also known as Data Breaches, in this kind of fraud, the fraudster poses as legitimate companies and asks you to click on a particular link in a text, web pop-up or email. When you click, the link prompts you to type your payment information. It may also prompt you to download a malware onto your computer which copies your card number while you type them into a legitimate site.

  • New Account Fraud

The fraudster uses your Social Security Number and personal information for opening fraudulent credit card accounts by using your name. He can use such fraudulent credit cards for racking up fraudulent charges.

As per the Federal laws, if reported immediately, the victims of credit card holders are liable to the extent of $50 in respect of fraudulent charges. However, for the debit card holder, if the matter is reported within two days of the occurrence of the fraud, the liability is $50. In case the matter is reported in 60 days, the liability is $500. If it exceeds 60 days, all charges are to be borne by the card holder. However, credit and debit cards issued by payment network such as Mastercard, Visa, American Express and Discover provide have zero liability.

  • Prevention

Credit card fraud can be prevented by adopting the following steps

  • Regular Monitoring of Your Statements enables you to spot the fraud sooner
  • Watching Your Credit Scores and Credit Reports enables you to spot new account fraud sooner, by letting you know any unfamiliar credit inquiries or active credit card account. A sudden drop in credit scores warns you to be alert.
  • Upgrading to EMV Chip Cards by requesting your card issuer
  • Stop Sharing Your credit card information, even with your closest ones
  • Stick to trusted websites for online shopping
  • Never store card information in online shopping
  • Sign up for alerts
  • Click carefully

 

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