Credit card skimming is a type of credit card fraud where a crook, with the use of a skimmer (a small device mounted on top of the existing card scanner) & a pin hole camera or counterfeit keypad, steals card info, including your card number, CVV code and PIN.
Every bank transaction, whether online or at an ATM, is accompanied by a feeling of unease. For some, it is because their bank numbers are declining, but for most, it is the risk of losing important personal data and, consequently, their hard-earned money.
While an online transaction requires an OTP (one-time-password), along with the card's pin to run, the same is not the case with ATMs. Anyone with your card number and pin could withdraw money from your account, leaving you far more bankrupt than yesterday.

 But how would a stranger get your credit card information? There are several ways, and the rubbing of credit cards is the most common.

 Credit card theft is a type of credit card fraud in which one steals personal information from the card, such as card number, cardholder name, and card PIN using a theft device. The thief then illegally withdraws money from the account or sells the data. 

How does credit card skimming work?

The black stripe (also called a magnetic stripe) on the other side of your credit card stores all the information required by a thief to steal your money. The strip includes the name of the cardholder, the card number, the expiration date and the CVV code. The magnetic stripe is made of small iron-based magnetic particles and is divided into two or three individual tracks. Each particle can be magnetized in a different direction, depending on the information it encrypts.

At the heart of a skimming operation is (surprise!) A skimmer. The skimmer is a scanning device mounted on top of the existing card scanner in an ATM. Most ATMs across the country incorporate a common design, and as a result, the black market is awash with skimmers similar to the legitimate ones installed in ATMs. These skimmers are so well produced that most customers are completely unaware of their presence. Therefore, each time you insert your card into an ATM, you also unintentionally pass it through the skimmer.

Skimmers are able to read the magnetic stripe on credit cards and store the encoded information on them. Some skimmers can store the data from hundreds of cards. The information from the basic skimmers must be extracted manually, which increases the risk of getting caught in the process. However, some advanced skimmers can access it remotely and are able to transmit data wirelessly.

However, the credit card information is of no value without the card pin. The PIN code is stolen using a small camera or a counterfeit keypad. Thieves often install a small camera, in suspicious places and camouflaged by the naked eye, to register cardholders who enter their private code. Some even go so far as to buy fake overlay numbers (which are even more undetectable to the user) to record the dialled numbers.

Once a criminal has all the information about a credit card, they can proceed to make a fraudulent encrypted credit card with the stolen information and then use it at an ATM to withdraw their hard-earned money!

How Can You Protect Yourself From Credit Card Skimmers?

  • If you use a debit card, run it as a credit card without using the PIN. If you must use the PIN, cover your hand when writing the number, in case you are viewing hidden cameras.

  • Look for a broken security seal. Many service stations now place security seals on the cabinet panel. When the panel is opened, the label will indicate "null", a warning that tampering has occurred.

  • Look for unusual features in the card reader. The pump reader you are using should resemble other readers on the station. Also, you should not be able to move the reader.

  • Pay inside. This could help you avoid skimmer entirely.

Other ways to avoid skimming, or help you recover quickly, include:

  • Make purchases with chip cards.

  • Paying in cash instead of plastic.

  • Using an online or mobile payment service such as Apple Pay, Google Pay or PayPal.

  • Set up alerts to monitor activity on your credit and debit cards.

  • Periodically review your credit and debit card statements to check for suspicious transactions.

  • Choose gas pumps in well-lit areas within the line of sight of store employees. Scammers tend to install credit card rubbing devices on pumps that are difficult to see.

  • Avoid ATMs in remote places.

  • Go to another ATM or gas pump when you suspect the presence of a credit card skimmer.

An article by Munna Suprathik