Credit Cards Online Information

If Mari Frank could become a victim of credit-card skimming at a restaurant, then no one is immune to the crime.

An expert on identity theft, a lawyer and former California assistant district attorney, the outraged Frank, whose own credit-card identity was stolen in 1996, was prompted to launch a Web site devoted to helping victims of the crime she calls "financial rape."

A frequent guest on network television talk shows, Frank even had visited the White House when President Clinton proposed the Consumer Protection and Financial Privacy Act. She appeared in a photo with the former president and Hillary Rodham Clinton, showing off one of the two books she had written on the subject of identity theft.

So imagine her surprise when, following a business trip to New York last summer -- where she had come to demonstrate credit-card skimming before a group of Chase Manhattan Bank officials -- she received an $11,000 American Express bill for fancy truck accessories that she never had purchased.

Frank, who lives in Laguna Beach, Calif., believes her credit card was skimmed in a restaurant while she was in New York demonstrating the very crime she fell victim to. If she's right, then she joins thousands of other restaurantgoers who make up the vast majority of credit-card skimming victims.

Law enforcement authorities and bank investigators believe that as much as 70 percent of all cases of credit-card skimming or cloning stem from rip-offs in restaurants. Gas stations, which are the next most active retail sector for skimming, register a distant second, with 14 percent of all reported cases occurring there.

While credit-card company officials claim that instances of skimming are declining because of the development of new programs to deter it, they say that operators still must be wary of the crime, which undermines the consumer trust that operators work so hard to build.

"When I returned home from New York, I had my AmEx Platinum in my wallet," Frank says. "But I opened my billing statement and found $11,000 worth of fraud that was made in the desert of California for truck accessories, like tires and fancy wheels, while I was in New York with my card.

"AmEx was very good about it and sent me a new card, but I knew I had been skimmed."

Experts say that skimming may be costing the major credit-card companies as much as $300 million a year collectively.

Credit-card skimming occurs when the data on the magnetic strip on the back of the card is captured by swiping a customer's card through a skimming device that resembles, in most cases, a beeper.

The information from the magnetic strip then is stored in the skimmer until its memory fills up or until it is downloaded to a computer or transferred to produced cloned cards.

Because the device is small enough to fit unseen in an adult's hand, an unscrupulous waiter, bartender or cashier could swipe the card without being seen, says Buddy Tinnell, director of fraud control for Visa USA.

The restaurant industry is particularly vulnerable, Tinnell says, because it is one of the few retail sectors where, for a few moments, customers are separated from their credit cards and often can't see their servers processing payment authorizations.

The criminals who specialize in the crime prey on restaurant staffers who consider themselves underpaid, knowing they will be tempted by perswipe bounties of $20 to $50. At the end of a shift, servers turn the boxes over to their "handlers," who make counterfeit cards or Internet purchases before the unknowing victims receive their next billing statements.

Tinnel reports that credit-card skimming first materialized in the mid-1990s when e-commerce and other types of electronic transactions started to become popular.

"Any technology that has a legitimate purpose can easily be abused without fail by a criminal," Tinnel says. "It's an enabler."

"Young people who fall for this think that they are doing nothing wrong, that it's not hurting their employers," he adds. "But this is a form of counterfeiting, which brings in the Secret Service and a range of bank investigators. And when these young people are caught, they are as guilty as the person who uses the card fraudulently."

Credit-card skimming appears to be declining as a result of numerous educational programs -- such as posters alerting employees to the crime and seminars by credit-card companies and state restaurant associations. Still, cloned credit cards cost Visa about $60 million a year, Tinnel estimates.

Tinnel says Visa offers $1,000 for information leading to the apprehension of people involved in skimming.

Christine Elliott, a spokeswoman for American Express, says she could not disclose how much the crime costs the company, but she says her company has a very active program to alert its restaurant clients to the perils of skimming.

"We have a number of pamphlets and programs to help owners identify the crime, but it involves some fairly sophisticated technology that could be re-engineered against us if we discussed it in public," she says. "But we are constantly talking to law enforcement and others about it."

# posted by Medical Information : 3:54 AM