Close Encounters With Credit Card Fraud

I’ve been reading for a while now that credit card and debit card fraud is on the increase, and lately it’s gotten personal.

Several week ago my daughter’s debit card was cloned and used to withdraw cash from her bank account. She had bought gas at a Valero station in Goleta, Calif., where police later discovered credit card skimming devices on the pumps.

Shortly afterward, I got a call from CitiBank asking me about a fraudulent charge on my Mastercard — about $650 spent with an Internet retailer in Australia. It’s not clear how that happened, but I had to get a new card and account number.

It was the second time I’d had to get a new card in six months. The first time there was no fraudulent activity, but Citi believed my information might have been compromised.

Last week in Montreal, my husband paid for a meal with a credit card. The waiter left the card on the table, came back with the card reader and completed the transaction right in front of us — clearly to quell fear of fraud. I saw this done in Mexico five years ago, but hadn’t seen it since.

So what’s a consumer to do, especially when traveling and visiting unfamiliar retailers?

First, consider using a credit card instead of a debit card at gas stations, to reduce your liability. Hell, you could even use cash.

Second, keep an eye out for card skimmers attached to card readers on gas pumps and ATMs, as well as small cameras meant to record your PIN number. They can be very difficult to spot, but the Consumerist blog had some excellent pointers and photos in an entry back in April.

It will be interesting to see what the credit card industry will do about this expensive threat. Consumers are already pretty fed up with stricter terms and higher rates. Some retailers are rebelling and offering incentives to use cash. It seems to me that the whole plastic for payment model could be heading into a crisis, and that some other system may ultimately emerge.

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