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As some of you may or may not know, I am an economic crimes detective at a suburban police department in Florida. Having witnessed these crimes in a very close and personal way, I have developed somewhat of a passion to educate the public on these types of crimes so that they can better avoid becoming victims themselves or, having already been targeted, keep their monetary losses to a minimum. What I would like to discuss today is something we have been seeing a lot more of lately: credit card skimmers placed inside gas pumps.

What sparked this post was a recent syndicated piece appearing on fool.com from GOBankingRates: http://www.fool.com/investing/general/2016/05/12/7-ways-to-p...

Having read the article over the weekend, its been gnawing at me to speak up because, unfortunately, the article contains some out-dated and incorrect information. Please note, I'm not trying to pick on fool.com or GOBankingrates.com (where the article first appeared in April). This kind of misrepresentation of information is found all over the internet because many personal finance writers just don't have first hand information on this type of thing.

On the other hand, my department routinely goes through and performs inspections on the gas pumps in our city. We almost always discover some. Last month, we found four when we went through the city. The problem is so prevalent that bank and credit card fraud investigators will come out and assist us with the citywide sweeps.

Before we get to the errors in the article, let's address we are seeing a rise in credit card skimmers:

As many of you know, last October a huge liability shift for fraudulent credit card transactions occurred. Retailers either had to shift to taking EMV chip-embedded credit cards or be accountable for all of the fraudulent credit card activity at their place of business. What you might not know, though, is that self-serving gas station pumps do not need to be equipped with card readers that accept EMV payments until 2017.

There are a variety of reasons gas stations were given an extension on this deadline. Namely, changing out gas pumps is an extremely costly and time-consuming event. Besides paying for new readers, gas station owners must also have each pump inspected for accuracy by state authorities before it is authorized to serve motorists.

Unfortunately, this means two more years of thieves stealing credit card info from unsuspecting consumers. And because many retailers have made the transition to EMV-compliant terminals already, we are seeing a concentration of fraud at the weakest links in the payments chain. Right now gas stations are that weakest link.

Back to the article. The first claim the article makes is that "Gas station credit card skimmers are external devices that thieves attach over a real credit card slot at a gas station pump." Just a little later we read, "If a credit card slot looks different from the other card readers at the station, it might be a setup for a credit card skimming fraud...they are attached using only double-sided tape, so thieves can easily remove them. Before sliding a credit card through the machine, tug on the reader to ensure it is securely attached; skimmers will easily pop off with little effort."

Wrong, wrong, wrong. I am sure somewhere, someone might still use this method but I haven't personally seen it in years. These days fraudsters are much more sophisticated and, with just a little more effort, can place the skimmer inside the pump itself.

Do not be fooled into thinking you could spot them from the outside. There are two basic types of pumps, one of which can be opened with a universal key that can be bought online and one where the siding can simply be unscrewed using a cordless screw gun in a matter of seconds. Hence they are easy to open, place the device inside, and close back up. If the fraudsters are pros, they can do this in under a minute; two minutes top. Many times, the fraudsters will send someone inside to the clerk to buy a product or distract them in some other sort of way. When the skimming devices are placed inside this way, they are impossible to spot without opening up the pump.

Rarely do you find a gas station owner who spends extra on added security features for his pumps. In fact, in our city, there is exactly one gas station out of about twenty that placed special locks on its pumps.

Later, when the article does acknowledge that skimmers can also be placed internally, it tells the reader to look for the tamper-evident stickers:

Survey the gas pump's edges -- especially the hatch surrounding the credit card unit. If it looks battered, as if someone tried to pry it open, or if the lock itself is broken, it might be compromised. Some gas stations, like Shell stations, apply a tamper-proof seal across the opening of the credit card door. When a door is broken into, the sticker is lifted revealing the words "VOID" on the sticker.

What to do: Before using a gas pump, find out whether the pump has a tamper-evident sticker. If it has one that is placed on the unit correctly -- across the opening of the door -- and it reads "VOID," move on to the next pump or station.


Unfortunately these stickers are worthless. They are often placed wrongly on the pump. They are rarely replaced in a timely manner by employees after an inspection or even when paper is replaced for receipts. There have been times when I've opened a pump and the sticker just came off the pump as I opened it. I could have easily picked it up and placed it back on the pump. They are also easily faked by fraudsters. These stickers will only give you a false sense of confidence when using a pump.

I don't want to bash the article too much. Point #s 5-7 are solid advice. As the article suggests, the only way to completely ensure you will not be a victim of such a device is to go inside and pay for your gas there (assuming the clerk isn't using a device!). In our world, I know going inside to pay actually seems like a Herculean task. I get it. I rarely go inside myself, and I am completely aware of the risk.

So, when paying outside, use the pump or row of pumps closest to the clerk. The vast majority of such devices will be found on the far row of pumps and on the opposite side of the pump from the clerk. This doesn't mean they are never found on pumps closer to the clerk but, in my experience, it is definitely rarer to find them in pumps that are in an attendant’s clear line of sight.

Finally, the most important thing you can do is to keep vigilantly monitoring your money in all of your various accounts. In this day and age, it is extremely rare when an individual consumer is not immediately reimbursed when they report credit/debit card fraud in a timely manner. There are other types of fraud, most involving wire transfers and money services, where this is not the case. But with credit and debit cards, fraud rarely costs the individual consumer real money...if and when it is reported in a timely manner. But also understand that using your credit card affords you more protection than your debit card.

All too often I have seen people, maybe an elderly widow or a carefree single millennial, come in and want to report some manner of fraud involving their bank account that occurred six months ago but which they just discovered. Proving fraud at this point is nearly impossible. Surveillance video is erased. Bank tellers and clerks cannot remember. Any and all evidence is gone. At this point banks will rarely reimburse all - or any - of the questionable charges!

Keep monitoring your accounts religiously and immediately report suspicious activity. That is the single most important thing a person can do to protect themselves from permanent monetary loss after an account of theirs has been compromised.

Matt
Short on fraud, long on stopping it
MasterCard (MA) and PayPal (PYPL) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx
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