With the U.S. continuing to rely on credit cards as well as debit cards that use the magnetic stripe technology, U.S. bank card holders seem to have become a soft target and are prone to attacks by thieves in Connecticut. This year alone Connecticut as well as ten other states were prime targets by conmen who used fake card readers that were installed at cash registers to tamper with card details. These fake devices were used to get hold of the PIN numbers, card data, as well as authorization codes. This practice is called skimming. The matter is now being investigated by the U.S. Secret Service.
Most nations such as China, Saudi Arabia, Canada, Mexico, and Indonesia are switching over to the EMV cards that hold account details in an encrypted form as they are embedded with the smart chips. Oliver, (researches in fraud practices in the retail segment) was quoted as saying that U.S. might fast become an island and a safe haven for fraudsters if they do not act swiftly and make a switch in technology.
Experts feel that losses due to skimming could be greatly reduced if the financial institutions switched over to the encryption technology. The magnetic stripe (a 40-year-old technology) was never a design which had proper security features. Only some nations still use this technology.
Fraudsters admit to using skimming technology where they use pin-hole cameras installed at ATM's and other skimming devices. Once they obtain the account details, they use the information to make counterfeit cards which cost banks losses up to a tune of about $200,000. In fact, the U.S. Bank card details fetch a high price in the online black market and the account information that is stolen is sold for a fortune. The U.S. Bank cards are soft targets because the account information can easily be transferred from one card to another to create a counterfeit.
A card reader can be easily bought on the internet for a pittance of $10 and for another $35 one could get hold of an encoder that could be used to obtain data from the magnetic stripe. This data is transferred to another card and a clone is thus produced. All the while the cardholder is safely holding on to their cards blissfully unaware of the fact that someone else is already in possession of the cloned card. Then realization dawns once the statement arrives, by which time it is too late. This type of fraud has become international and has grown in magnitude.