Knowledge Sharing Meeting January 11th 2016

Prepared by: Vidya Jaisingh

CARD SKIMMING FRAUD

Definition of Skimming. What is a Skimming Device?Types of Skimmers.EMV/ Chip & Pin Technology.Cross Border Fraud.Card Fraud Statistics.Tips on how to avoid skimming.

AGENDA

The act of using a skimmer to illegally collect data from the magnetic stripe of a credit, debit or ATM card. This information is copied onto another blank card's magnetic stripe and is then used to make purchases or withdraw cash.

What is Skimming?

The skimmer is an electronic device that scans a credit/debit card and stores the information contained in the magnetic stripe.

What is a skimmer?

1. Those that cause the ATM to malfunction.The skimming device is inserted into the slot of the ATM machine where the credit/debit card would normally be swiped. When the consumer inserts or swipes his card, it is not read by the actual ATM, but rather, by the illegitimate skimming device.

Consequently, the consumer’s intended transaction does not occur. This can be a hint to the cardholder that the machine may have been tampered with.

Types of Skimming Devices

2. Those that do NOT cause the ATM to MalfunctionThis type of skimmer is placed over the card reader but doesn’t block off the reader. It may be attached with double sided tape and stick out half an inch from the ATM.

In this instance, the consumer’s intended transaction does occur.

Types of Skimming Devices (Cont’d)

ATM Skimming Process

3. Hand held SkimmersThese are utilized during Point of Sale (POS) transactions. The card maybe double swiped, i.e. it is swiped through the official POS reader and also through a skimming device. In this case, a video camera may be hidden to record the customers entering their PINs or a keystroke-recording device may have been attached to the POS machine.

Types of Skimming Devices (Cont’d)

EMV is a global standard for credit and debit payment cards based on chip card technology. EMV stands for Europay, MasterCard, and Visa, the three companies that originally created the standard.

EMV cards are smart cards which store their data on

integrated circuits rather than magnetic stripes, although many EMV cards also have stripes for backward compatibility.

Payment cards that comply with the EMV standard are often called chip-and-PIN cards.

EMV Standard/ Chip & Pin Technology

EMV vs. Magnetic Stripe

Chip and PIN cards contain an embedded microcomputer chip that holds cardholder PIN data. To use a card, a customer must enter his or her Personal Identification Number (PIN), instead of his or her signature, to complete a transaction.

Entering a PIN is faster than requesting and verifying a cardholder’s signature, making checkout quicker.

Chip and PIN cards still have a magnetic stripe in order to be compatible with other international and regional standards, so that customers will be able to use their cards on non-EMV terminals

How does it work? EMV vs. Magnetic Stripe transactions.

To date, Europe, Canada, Latin America, and the Asia/Pacific region are all well on their way with migrating from the legacy magstripe standard to EMV chip card technology.

The U.S. is the world’s single largest user of payment cards. However, the U.S. is one of the last countries to migrate to EMV chip technology. American Express, Discover, MasterCard and Visa have all announced their plans for moving to a chip-based payments infrastructure in the U.S

62% of transactions conducted across international borders involve a chip-enabled card used at a chip-enabled terminal.

EMV Compliant Countries

Cross-border fraud occurs when criminals use a consumer's credit/debit card data in one country to make fraudulent transactions in another country.

For Example,In Germany, there is a chip in every card, but the card can be skimmed since it still contains a magnetic stripe for use in non-EMV countries/terminals. The card cannot be used in Germany because any terminal in Germany will say that this card does not have a chip so attempts to get any money from it will be futile.However, a person can take that skimmed data and bring it to the U.S., use it on a terminal that’s not EMV compliant and withdraw money from that person’s account in the U.S. Chip & Pin cards can be skimmed in Europe but can not be used in Europe so they are brought to the U.S for use.

Cross Border Fraud

In 2014, 47 percent of fraudulent cross-border transactions on U.K. credit cards took place in the United States.

Most experts believe that the reason the U.S. has a disproportionately high amount of fraud is because it has been slow to adopt EMV.

Card Fraud Statistics

more than $2 billion in losses (and rising) at ATMs around the world; with

33 percent of all fraud incidents linked to skimming crime

And 98 percent of all losses resulting from skimming crime.

Unfortunately, the migration to smart chip-enabled, EMV compliant smart cards has offered little relief from skimming exploits at the ATM; the magnetic stripe data that remains on EMV bankcards is still highly valuable to crime gangs whose operations reach into non-EMV markets such as the United States.

ATM Skimming Statistics in 2015

Keep your eyes open- If you're looking at the ATM and it looks a little loose, or you see scratches or sticky tape residue, be wary. Thieves will often attach false fronts to ATM with tape. Also, you can pick around with your fingernail at the keypad to make sure there is not another keypad on top of it.

Cover those keys- Cover your hand as you enter your PIN to hide what you are typing.

Tips on how to avoid Skimming

Pay attention to your accounts- Monitor credit card receipts and check them carefully against your statements. If you are married, sit down with your spouse to account for all charges. Some thieves take out small amounts in hopes cardholders won't notice.

Be on the lookout for potential thieves- Don't assume the thief isn't watching you. Some skimmers use a combination of high-tech (by rigging the machine) and low-tech (by having someone on site).

Tips on how to avoid Skimming (Cont’d)

When in doubt, don't- Use the ATM, that is. The only way to prevent having your ATM card skimmed is to recognize that the machine has been tampered with and then walk away without using it

Make sure your card stays in sight, and never let anyone leave of your presence with the card if you can help it.

Tips on how to avoid Skimming (Cont’d)

Avoid the use of ATMs that require a card swipe at the door. Thieves frequently add skimmers to these key card locks and then hide cameras above or beside such ATMs, allowing them to steal your PIN and card data without ever actually tampering with the cash machine itself.

Tips on how to avoid Skimming (Cont’d)

Thank You & Have a Great Day.