SKIMMING in credit cards

ALL plastic cards viz. ATM, debit and credit cards have on their reverse a prominent black stripe, about one cm. wide, running across the length of the card. This is the magnetic stripe, which stores the essential information of the card holder. Skimming is unauthorised copying of information from the magnetic stripe of a credit/debit/ATM card. A device called skimmer is employed to copy the information contained in the magnetic stripe. The copied information is then used by the fraudsters to clone the card(s) or is traded for similar cloning. The fraudsters can then create a card(s) with the same characteristics and freely use it / them for all purposes that you can do – till identified or caught.

Where can it happen?

Generally at petrol stations, restaurants, hotels and such outlets where the swipe terminal is not in your sight.

Warning signs:


• A shop assistant takes your card out of your sight in order to process your transaction.

• You are asked to swipe your card through more than one machine.

• You notice something suspicious about the card slot on an ATM (e.g. an attached device)

• You notice any unusual or unauthorized transaction in your account.

How to protect yourself from Skimming:


• If you are using an ATM, take the time to check that there is no gadget attached to the machine.

• If the shop assistant appears to be taking your card out of the sight, and if you suspect something, offer to go with that person or change your mode of payment to cash, if possible.

• If the shop assistant wants to swipe your card on the second machine, you should ask for your card back immediately.

• If you notice such incidents, immediately contact your card-issuing authority.

• Many card issuers provide the transaction alert service via SMS on your mobile phone. Do register for it. You will be alerted just in case your card is misused after skimming despite all precautions.

 

Be cautious about store credit cards during the holidays

When you arrive at a retail store register with an armful of items, the clerk will probably ask if you'd like to save 10 percent and receive perks by simply signing up for their store credit card. This may sound too good to be true ... and often it is.
 

Industry estimates show that the market for proprietary or private-label credit cards surpasses $100 billion annually, so many consumers are wooed by the initial discount. But these forms of plastic, offered by many major retailers to customers through their own financing arms or through third-party issuers, tend to carry high interest rates.  While the average bank credit card charges a rate in the neighborhood of 13 percent or 14 percent, many store credit cards' interest rates exceed 20 percent.  If you revolve a balance on your credit card, that initial 10 percent savings on a purchase will be eaten up very quickly by the hefty interest you will end up paying.


Michael McAuliffe, president of Family Credit Counseling Service in Rockford, Ill., says, "Every time you go into a store, they're going to push their card. I discourage shoppers from accumulating retail credit cards because they tend to carry very high interest rates, and it's an easy way to damage your credit score." In the formulas credit bureaus use to calculate your credit score, store credit cards differ from bank issued credit cards.  With the average U.S. consumer carrying four or five credit cards, additional store credit cards can make you look like a bigger risk to credit agencies, resulting in a lower credit score.  A lower credit score, in turn, can raise the interest rates you pay for other borrowing.

Although having a diverse mix of credit within your credit history can potentially aid your score, too many lines of open credit can signal danger to a lender, which may worry about the consumer's potential to incur additional debt.

Meanwhile, store credit cards are often forgotten by consumers who only complete applications in exchange for an initial burst of savings.  Many of the 500 million or so store credit cards in circulation are taken out during the holidays.  While the store credit card may not be used, the open account will still appear as a line of revolving credit on the consumer's credit report.

Judd Rousseau, COO and director of fraud operations for Identity Theft 911 in Scottsdale, Ariz., says that signing up for a store credit card during the holidays can also put you at risk for identity theft. 

"During the holidays, some stores will have tables set up trying to get people to sign up for store cards. They are gathering tons of peoples' personal information in an unsecure area," he says. "Often they have temporary or seasonal people doing that work, and they haven't always had a thorough background check. We're seeing more and more organized crime and street gangs getting into identity theft in that way; they'll get their cleaner-cut girlfriend or younger sibling to get those kinds of jobs and steal the information."

Consumers who sign up for store credit cards may also find that their personal information is shared with other companies or that they are placed on marketing mailing lists.  Stores such as retailing giant Wal-Mart routinely provide data to third parties looking to offer you special promotions or services.  While buyers' personal information and buying habits represent another source of revenue to companies, it may be an annoyance to consumers who are already flooded with offers they don't need or want.