Wednesday, May 29, 2013
Today in money matters, gone are the days of the good old-fashioned purse snatcher. With little brute and more skill, thieves only need a minute, sometimes a second, to pilfer your credit card data.
"Back in the beginning, they got the imprint of credit cards from the carbon copies they dug out of the trash," says William Noonan, assistant special agent in charge of the Secret Service's criminal investigative division. "Technology has changed things."
The number of compromised records has been on the decline the last two years, according to the Secret Service, after reaching a record high of 361 million records in 2008. The trend might reverse this year, however, after a recent string of mishaps.
This spring criminals hacked, phished or skimmed their way into the systems of Michaels Stores, Sony, marketing firm Epsilon, Citibank and even security expert RSA, among others. In some cases, they only obtained names and emails. In the worst cases, they got credit card numbers.
The schemes are simpler than you think. Bankrate presents the most common ways thieves pilfer your credit card information.
The waitress whisks away your credit card and swipes it through the restaurant's register. Then, she pulls out a small device, about the size of an ice cube, from her apron and swipes it through that, says Sergeant David Schultz of the Fort Bend County Sheriff's Office in Texas. While you're scraping the last of the chocolate frosting from your plate, your credit card information has been stored in the device, known as a skimmer. The waitress returns your card and performs the same magic trick on dozens of credit cards in a week.
Sally, Simon and Bud walk into a toy store. Sally and Simon roam the aisles, while Bud waits in line to check out. When Bud is at the register, Simon comes running up to the clerk, screaming that his wife has fainted. As Sally and Simon distract the sales clerk, Bud switches the credit card reader at the register with a modified one of his own, says FICO's Fraud Chief Mike Urban. For the next week, the sales clerk unwittingly collects credit card data on the modified reader until the trio returns, takes back the modified reader and restores the original terminal.
The Gas Lass parks her car in front of a gasoline station off the turnpike. It's late. There's no one around except a sleepy attendant at the register inside. The Gas Lass attaches a skimmer over the credit card reader at the pump. It's a special skimmer: It emits a Bluetooth signal to a laptop close by, says Noonan. The Gas Lass pays, heads off to the motel next door and sets up her laptop to receive the data from the compromised pump over the next several days.
Harry the Hacker installs malware -- a type of software that damages or infiltrates a computer or network -- onto a legitimate website with low security. The malware instantly downloads onto your computer when you visit the site and allows Harry to access your information. In another scenario, Harry puts malware on public computers and gathers the information you share with that computer, says Urban. Harry also infiltrates the computer system of banks, retailers and other businesses and extracts personal account information, Noonan says.
Phishing Phil uses malware to go after your laptop. He sends emails with attachments that promise dancing kittens or some other bait. When the user opens the attachment, malware instantly downloads onto the computer and leaves confidential information vulnerable. Phil also sends emails from a familiar sender with a link to a contaminated website that installs malware onto your computer. Some malware, called spyware, allows Phil to capture every keystroke including passwords to your financial accounts.
So what happens to these pieces of data when they're in no-good hands? They get sold.
The waitress, trio or Gas Lass sells each swipe for $20 to $40 a pop, says Urban. Harry the Hacker and Phishing Phil will get $5 to $10 a card and often sell the information online at the eBay of credit card activity. The person who buys the information verifies it and then sells it to a person who creates fraudulent credit cards with your account information attached to it. The card maker then sells it to other criminals who buy goods such as stereos or baby formula and sells them to regular consumers.
1. Set up mobile alerts for your phone if your financial institution provides the feature. That way, you can be aware of unusual activity as quickly as possible.
2. Regularly monitor your accounts online, so you can identify fraudulent transactions faster, says Schultz.
3. Avoid public computers. Don't log onto your email if your bank corresponds with you there. Urban suggests setting up an email account just for your finances and checking it from safe locations.
4. Avoid doing business with unfamiliar online vendors, Noonan says. Stick to established merchants and websites.
5. If your information has been compromised, notify your financial institutions and local law enforcement, which will contact the Secret Service if necessary. Also notify any of the three major credit reporting agencies -- Experian, Equifax and TransUnion -- to set up a fraud alert on your credit reports.