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Card Skimming: Going from Bad to Worse

Card skimming continues to pose a persistent challenge in the United States, as we continue to see a year-over-year increase in compromised cards. FICO, the credit-data firm, has underscored the spike in compromised cards stemming from skimming activities. The method used in card skimming includes criminals discreetly putting small card-reading devices into payment terminals found at points of sale and ATMs. This is done secretly to steal card information.

The article Why Card Skimming, Already Bad, is Getting Worse on, highlights this escalating issue with a quote from Debbie Cobb, Senior Director of Product Management at FICO,

"’This growth in total cards compromised, despite a smaller increase in compromise events, indicates that criminals are stealing more card details per compromise event. FICO’s data supports this trend, which shows a 48% increase in the average number of cards impacted per compromise in the first half of 2023.’ Cobb elucidates.”

Bank ATMs have become a favored target for skimming operations, now representing 33% of compromised locations. This alteration marks a significant shift in the types and locations of compromised terminals, a transformation acknowledged by Cobb.

“For the first half of 2023, we’ve seen a year-over-year increase in compromise events of 20%, jumping from 525 card compromise reports (CCRs) in 2022 to 625 CCRs in 2023. However, the more concerning increase is related to the total number of cards impacted, which jumped 77% year-over-year from roughly 70,000 cards in 2022 to nearly 120,000 cards in just the first six months of 2023.”

On a geographical front, states such as Virginia, Texas, New Jersey, Florida, and Colorado observed the most substantial spikes in skimming incidents, each reporting a year-over-year rise exceeding 50% year-over-year. Despite this, California retains its standing as the epicenter of skimming activity, recording a triple-fold increase in total compromises compared to the nearest runner-up.

Parallel to the skimming predicament, authorized push payment fraud has gained alarming traction. In 2022, U.S. consumers incurred losses of $8.8 billion due to such scams, marking a concerning 30% escalation from the previous year, according to FICO.

Adding to the mounting concerns, FICO's research exposes a planned uptick in the utilization of real-time payments by consumers, a trend that could potentially amplify losses. The unveiling of FedNow, the Federal Reserve's real-time payments system in July, is further expected to contribute to this trend. The article Why Card Skimming, Already Bad, is Getting Worse also notes,

"’We are also anecdotally seeing an increase in first-party fraud, as consumers feel the pinch from persistent inflation, rising interest rates, and tightening credit standards,’ Cobb says. ‘Much of that fraud manifests as consumers exaggerating or falsifying information—like annual income on a mortgage or credit card application.’"

How can skimming be avoided? The Parabit MMR and MMRC include Skimming detection with SkimGard® Technology. Parabit’s patented SkimGard® Technology is engineered to detect virtually all skimming devices discovered and investigated by law enforcement and FI’s. Skimming threats include reader tamper, cable cut, skimmer overlay, reader replacement and RFID sniffers. The design also helps resist shimming. SkimGard® Technology integrates with all alarm panels, video recorders and ATM out of-service inputs.

To learn more email or call +1 516.378.4800, or send us a message via our contact form here.


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