Preventing Identity Theft: Swiping and Skimming — All in a Day's Work?

By Dawn Handschuh, Personal Finance Writer   

Dining out at your favorite sushi restaurant shouldn't be a high-risk activity, but it is. Every time you pay by credit card, you expose yourself to the possibility of becoming a victim of credit card fraud.

Credit card scams and shady waiters can easily turn customers into identity theft victims. Credit card skimming occurs when someone swipes the magnetic stripe on a customer's credit card to get the account number with a device small enough to hide in a pocket or hand. It takes about two seconds. This YouTube video shows how easily it's done.

The data can be downloaded on a computer and e-mailed anywhere. Not surprisingly, skimming is a problem worldwide, and identity theft stories abound. A single device can hold hundreds of card numbers that can be sold or used immediately for phone or online purchases. While they have no legitimate purpose, skimming devices are available online for as little as $300.

Gold and platinum cards are targeted most often for this type of credit card fraud. Most identity theft victims won't realize what's happened until they see a slew of unauthorized charges on their billing statement.

Skimming most often occurs at restaurants because the waiter/waitress usually leaves to swipe your card (legitimately), then swipes it again (illegitimately) when out of sight.

Credit Card Scams: Identity theft stories

One 23-year-old Delaware waitress was paid $10-$15 for every card she skimmed. A similar scam in Los Angeles was discovered after six customers complained of $16,000 in unauthorized charges. All, it turned out, had dined at the same restaurant.

In Denver, after a supermarket customer had trouble using a DVD rental machine, employees discovered a credit card recording device attached above the machine's credit card reader.

To prevent your credit card from being skimmed:

• Keep a close eye on your card when you pay.
• At restaurants, escort your card to the cash register and watch it.
• Save receipts as proof of payment and to compare to monthly billing statements. If you suspect identity theft, report it promptly to the issuer.
• Total your charge slip before signing the receipt.
• Watch for illegitimate credit card recording devices when using ATMs, automated gas pumps or movie rental boxes.

And remember the golden rule: When in doubt, use cash.