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Card Fraud: How does it happen?

yojitani

yojitani

macrumors 68000
Original poster
Apr 28, 2005
1,858
10
An octopus's garden
So I've just found out that someone has been making fraudulent charges via my debit card for the last 3 months. I know it's careless on my part. I tend to check the balance on my account and if it looks about right, I don't look any further. But what happened is that this person has been making small charges, the biggest being $20 over the months that have piled up. Their mistake was charging $75 for gas - I never pay that much for gas! But at any rate, I'm looking at minus $700 over the time period. What I want to know is how does it work? Until the beginning of May, this person had been charging the card every few days at the same gas station. I mean, if I walk into a gas station and say 'I lost my card but I have the number' how does that fly? I know the station and the owner is very highly respected, I can't imagine he'd be that careless.

It's all been reported now, but I truly cannot work out how this could happen. I'm super anal about card receipts. I actually have bags full of them - I burn them in the summer usually. None of them go into the trash... anyway, let this be a warning!!!
 
They can use a handheld scanner to grab the info off of the magnetic strip on your card. This obviously most commonly happens in places where the card leaves your possession, such as restaurants.

Then creating a new card for themselves with your info encoded on it is simple.
 
Just redo a mag stripe on an old card ... not many people check the number with receipts when it gets busy.

Plus fake card blanks are easy to get also.
 
Someone affixed a scanning device to the gas pump at my local Costco and snagged a bunch of debit card numbers and their PINs before the device was detected. I was one of the people hit. I noticed fraudulent ATM withdrawals all over the country during the 48 hours immediately following the theft.
 
yellow said:
I do when I buy gas. :confused:
Click to expand...

Certain debit cards also have "credit" capabilities, and don't need a pin.

There are card readers that piggy back onto real card readers to steal people's card info. Probably what happened in this case.

Anyway, since the card was used locally, there is a high chance to catch the crook.
 
yellow said:
I do when I buy gas. :confused:
Click to expand...

If you use it as a debit card, it requires a PIN.

But almost all debit cards these days carry the VISA or MasterCard logo and can be used as a credit card. No PIN is required at the pump. And only a signature is required if used in person. Which would of course match (not they really check them very often) if the person had a duped card with their own signature already on the back of it.
 
Consultant said:
There are card readers that piggy back onto real card readers to steal people's card info. Probably what happened in this case.
Click to expand...
The piggy-back method certainly works, but the new way seems to be hacking the POS or Back Office of the store you're buying stuff at. :eek:

Incidents at Hannaford's grocery stores, Okemo Mountain Resort, and some Dave and Busters recently resulted in millions of card numbers and track two data being stolen (by hacking BackOffice/registers to sniff the stores network as the card was being authorized). That's about all that's required for someone to make a fake card. (And also one of the reasons Lowe's asks to physically see your card to type the last four digits before they complete a sale. Apparently most hackers don't take the time to product a fake card that passes the eyeball test.)

yellow said:
Ah, I never use it in that manner at the pump.
Click to expand...
Hit the credit button on the pump next time. ;)
 
I don't know how it happened, but I got hit hard on December 23rd(#@!$%@#) of last year, for $2700. It was crippling. Purchases were made at Home Depot, HP, Best Buy and some consulting/outsourcing firm in India (?). Without question, they went through as if I made them myself. CC security gets worse and worse every year it seems.

I very rarely use my cards online or in person anymore, even though they issue me a temporary CC# for online purchases.

If I must, I also set up a debit card with a second financial institution that I have to fund manually. It's nice knowing that 'X' is the max amount of money I can lose.
 
jb60606 said:
I don't know how it happened, but I got hit hard on December 23rd(#@!$%@#) of last year, for $2700. It was crippling. Purchases were made at Home Depot, HP, Best Buy and some consulting/outsourcing firm in India (?). Without question, they went through as if I made them myself. CC security gets worse and worse every year it seems.

I very rarely use my cards online or in person anymore, even though they issue me a temporary CC# for online purchases.

If I must, I also set up a debit card with a second financial institution that I have to fund manually. It's nice knowing that 'X' is the max amount of money I can lose.
Click to expand...

Ouch! Did your bank reimburse you?
 
yojitani said:
Ouch! Did your bank reimburse you?
Click to expand...

They reimbursed me, in full, in 7 days and got me a new card in two (but I couldn't use it until after I was reimbursed, as the fraudulent charges were still in "pending" status, and my funds were therefore frozen, until the charges cleared the other financial institution, then gone).

with it being 2 days before xmas, they showed sympathy and worked their tail off to get me squared away; but I found it somewhat disconcerting that my bank (one of the largest in North America), couldn't prevent something they knew to be fraudulent. They were powerless.

I switched to another bank shortly after, not because I think they can stop such transactions, but because they have tighter security measures, specifically for online shopping.

Moral of the story: Don't wait until December 23rd to do your holiday shopping.


From what I understood, this is what I believe took place:
Dec 22nd: I have $1600 in my account
Dec 23rd: $2700 charged to my account.
Dec 23rd: All $1600 frozen. I no longer have access to my money. I'm broke.
Dec 23rd: I call my bank to dispute charges. They place my claim on the account - they can't cancel charges. I cancel my card.
Dec 23-28: All fraudulent charges have been executed. My $1600 is gone and I now owe my bank $1,100 and over-draft fees.
Dec 26th(+): New card arrives.
Dec 31st(+/-): Debt erased, $1600 restored by bank to my account.
Every day since: Renting a bomb shelter. Stocking up on SPAM. Patiently awaiting the end of the world.
Click to expand...

From what I understand, if it were an actual credit card, as opposed to debit, it would have been handled differently and in a more efficient manner. Or at least a credit card isn't directly tied to your cash and you'd still have your bank funds to lean on.
 
OP, if you know the Gas station owner as a friend or acquaintance, see if he can help you look onto the security cameras to see who was actually using it. It could wind up as a little bit of vigilante justice.
 
To the OP you might be SOL on the money. Debit/Check cards do not carry limited liability like credit cards do. So the banks are in there legal right to hold you accountiable for all charges made on the card. This compared to credit cars where they can only hold you accountable for the first 50 bucks.

Just though I warn you since most people do not know that little fact or tend to forget it. This is one of the reason I run everything either my AMEX or visa CC that I pay off at the end of the month. My check card sits in my wallet and has been reduced to limited used only and is never allowed out of my sight when I am using it.
 
adk said:
OP, if you know the Gas station owner as a friend or acquaintance, see if he can help you look onto the security cameras to see who was actually using it. It could wind up as a little bit of vigilante justice.
Click to expand...

I was thinking about that. I don't know him all that well, but he is highly regarded in the community because of his charity work. I think I might wait for the bank to do what they do first. What I wonder though is if the person isn't an employee there. I mean, there are transactions from every other day almost for the last 2 months, some for just a couple of dollars. Because of the frequency and the fact that it's a pretty low-key place, I would imagine that the owner wouldn't even need security cameras.

@Rodimus: Yeah, I'm not 100% sure about what the outcome will be. I actually bank at a credit union and they tend to be a little more protective of their customers... but that's a bit woolly-headed! When I talked on the phone today to their security person, they never indicated that there would be a problem reimbursing... The very strange thing is that I almost never use the card.
 
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