Skim Scam, A High-Tech Method of Theft and Fraud

A high-tech method of theft and fraud emerges.

Over the past five years, fraud involving debit cards, card processing equipment and PIN numbers has increased fivefold, and no retailer is immune to the threat.

The 2011 National Retail Federation Organized Retail Crime survey found that of the 129 retail companies surveyed this year, nearly all have been the victim of organized retail crime in the past 12months, an increase over last year and the most in the survey’s history.

One way thieves are illegally obtaining credit and debit card information is through the use of skimmers—electronic devices that are installed on credit and debit card readers and automated teller machines that record information from cards and steal personal identification numbers. That data can then be used to create duplicate cards thieves can use at ATMs or retail locations.

“Thieves are remarkably creative. Card readers can be tampered with, replaced or altered in seconds,” said Dan Hudson, senior account executive with First Data North America.

Skimming is a threat to fuel retailers on two fronts, said Joe LaRocca, senior asset protection advisor for the National Retail Federation. Not only do fuel retailers run the risk of criminals using their pumps to collect credit and debit card numbers, but they also face losses from thieves that used skimmed data to purchase fuel.

“Because it is a self-service environment more so than any other type of store, thieves will use fuel retailers to check the validity of a card or they’ll use a series of credit cards to purchase large amounts of fuel and then they’ll resell it,” LaRocca said.

Skimming can happen to anyone and is often a well-coordinated attack. Earlier this year thieves tampered with PIN pads at around 90 locations of the national craft store chain Michaels. As a precaution, Michaels removed about 7,200 additional PIN pads from its U.S. stores, costing both time and money.

Most skimming devices are small and portable and may resemble a pager. However, technology continues to evolve, getting smaller and more precise.

“Now it can be difficult for employees even to recognize a skimming device,” LaRocca said. “Don’t let even small details go unnoticed. If you see any type of new tag protruding from a reader, check it out.”

Hudson said PCI Compliance Certification is the greatest protection an owner can have against all methods of fraud, including skimming. “If the business is ‘PCI compliant,’ risk is greatly mitigated,” he said.

LaRocca stressed the crucial role employees play in minimizing risk. “Let management and employees know that they should report it right away if they see another employee doing something illegal or if they see anything suspicious on a pump,” LaRocca said.

Criminals typically do surveillance before embedding skimmers. “If you start seeing some of the same people examining the pump or examining it from different angles, take notice,” LaRocca said.

If retailers do fall prey to skimmers, business owners may get calls from consumers saying they think their info was stolen from that location. “When you receive that call you should communicate to the consumer that they need to contact their bank,” LaRocca said, adding that retailers should contact law enforcement.

As retailers and law enforcement step up their efforts to reduce fraud, criminals will find new ways to steal, but LaRocca said retailers should stay up to date on current trends. “These are very sophisticated criminals and retailers are always playing a game of cat and mouse, but they’re going to exploit the weakest link in the chain,” LaRocca said.

By staying current and working to reduce their risk, truckstop and travel plaza operators can ensure they’re not the weakest link.


This article originally ran in Stop Watch magazineStop Watch provides in-depth content to assist NATSO members in improving their travel plaza business operations and provides context on trends and news affecting the industry.

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