credit impact – dinning out? beware of credit card skimming

Photo credit: iStock.

by Stephen Lesavich, PhD, JD   @SLesavich

In California, eight restaurant employees were arrested for skimming credit card information from customers and selling the information to credit card crime ring.  Over one million dollars of fraudulent purchases were made.  In Ohio, credit card skimming was occurring daily at fast food restaurants statewide.  The credit card skimming has become so widespread it is being investigated by the Secret Service.   In Florida, a waitress specially targeted those customers for credit card skimming who gave her a hard time or gave her a small tip.  Thousands of dollars of fraudulent purchases were made on the credit cards of rude customers and bad tippers.

Credit card skimming at restaurants is becoming a nationwide concern.

You need to keep an eye on your credit card, even when you go out to dinner.

Credit card skimming occurs in two ways, there is automated skimming and manual skimming.

Automated skimming occurs when a credit card is skimmed at a bar or restaurant with a small electronic device that records the card information magnetically.  The credit card skimmers can be purchased on the Internet or at electronic stores for less than $100.  Several of the skimmers are small enough, one to two inches in size, to be attached to a smartphone or tablet computer.  The collected magnetic information is then encoded on a magnetic strip of another magnetic card such as another credit card or a gift card.  The encoded cards are then used to make purchases at locations where the card is just swiped and not handed to a clerk.  The new EMV chip-based credit cards have eliminated most of the automated skimming that was occurring.

Manual skimming occurs when a person, such as a waiter, waitress, bartender, busboy, etc. manually records, a credit or debit card holders name, card number and security code.  The credit card information is being recorded by writing it down on paper or printing a duplicate copy of the receipt and writing done full credit card number on security code on it.  More recently, manual skimming is occurring when a digital picture of the front and back of the credit card is taken with the camera on a smartphone.  The digital picture this then immediately e-mailed or sent by text message.  The credit card information is then sold to another party who then makes fraudulent on-line purchases with the credit card information.  Such manual skimming is then used for fraudulent, card-not-present, on-line transactions.  Such on-line fraud can occur even with the new EMV chip-based cards and has increased significantly in the past year.

Credit card skimming at a restaurant can happen to anyone.  Even to a credit card expert.  I was actually a victim of credit card fraud when my credit card was manually skimmed at a local restaurant. My credit card number and security code were stolen at the restaurant allegedly by a waitress and passed along to an organized criminal group.

Within minutes of receiving his credit card information, the thieves created an e-mail account under my name and purchased several expensive computers on-line which were then shipped overseas with next day priority shipping.  The purchases occurred even before I even could drive home from the restaurant.

After learning of the fraud several days later and filing a police report with my local police department, the detective I spoke to told me a sophisticated crime ring was involved.  My case was referred over to U.S. Department of Homeland Security for review as possible terrorist incident because the computers purchased with my stolen credit card were being shipped to Africa and the Middle East.  So you never know what the end result of credit card skimming at a restaurant can be.

How can you protect yourself from credit card skimming? Follow these tips.

First, keep your credit card in sight at all times.  If a waiter or waitress is out of sight for a long time, ask why.  Report any suspicious behavior immediately to the restaurant manager.

Second, when your credit card is returned, make sure it is actually your card.  Many times a waiter or waitress who is skimming credit cards will intentionally give a card that belongs to someone else or a fraudulent card.  This gives the waiter or waitress more time to copy information from the card.

Third, check your credit card statement on a regular basis and review it for any recent charges.  Especially all restaurant related charges.

Finally, many restaurants are now providing secure payment kiosks on restaurant tables that allow a diner to pay their bill directly on the kiosk without passing their credit card to a waiter or waitress.

Many national chain restaurants such Red Robin, Applebee’s, Chili’s, Olive Garden and many others are now using on-table Ziosk tablet kiosks or similar payment kiosks.  The Ziosk tablet kiosks include an encrypted credit card reader and PCI-DSS secure credit card processing technologies.  The diner swipes his/her card directly on the payment kiosk and the diner’s credit card never leaves the diner’s own hand.  These kiosks also allow the diner to automatically add a tip electronically.  This helps prevent the waiter/waitress from altering a tip amount and preventing tip fraud.

Other restaurants are using new technologies such as Card At Table Service (CATS).  CATS is a secure card cared swipper that allows a waiter or waitress to swipe your credit card in front of you right at your table.  The CATS device encrypts your credit card information.

The waiter or waitress then takes the CATS device to a secure point of sale (POS) terminal where the encrypted data is transferred and payment is authored.  Your credit card never leaves the table.  Since your credit card information is encrypted by the CATS device it cannot be stolen by the waiter or waitress or obtained from a POS device that is infected with malware as recently happened at Target department stores.

You should consider using such secure kiosks and secure credit card swiping technology whenever possible.

Don’t let your credit card information become a tasty dessert for a restaurant skimmer.  Be diligent about recognizing fraud and taking the proper steps to eliminate credit card fraud anytime you dine out.

Join the conversation on this topic by leaving me comment below or join me on @SLesavich with the hashtag, #creditimpact.

Stephen Lesavich, PhD — Co-author of the award-winning and best-selling book:  The Plastic Effect:  How Urban Legends Influence the Use and Misuse of Credit Cards.

Regular columnist: Positive Impact Magazine

Copyright © 2016, by Stephen Lesavich, PhD.  All rights reserved.

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