Debit Cards, Credit Cards, Identity Theft and You

April 21, 2015

Did you know one of the most prevalent types of identity theft is debit and credit card fraud?

So what is identity theft exactly? It is wrongfully obtaining or using another person’s personal and/or financial identifying information in a way that involves fraud or deception, typically for economic gain. The most common type of identity theft is financial identity theft, where someone wants to gain economic benefits in someone else's name.

What information do thieves steal?

What is on the magnetic stripe of your debit and credit card that makes them so enticing to thieves? The magnetic stripe on a credit card contains three separate tracks of data. The first track contains the credit card number, expiration date, account holder's name, the country in which the card was issued and 79 additional character spaces. The second track usually contains the same identifying information, plus 40 additional character spaces. The third track of the magnetic strip varies depending on the issuing bank, but may include the authorized spending amount and the currency units. When obtaining this information it is easy to see how enticing it is for thieves to use this information to sell on the black market or to make counterfeit cards.

The 3 ways it can occur 

How does debit and credit card fraud happen? The first way is through a skimming device. Skimmers are devices that are installed in ATMs, gas pumps and POS (point of sale) terminals to record the credit and debit card account numbers. Suspects are either returning to pick up the skimmer or they swap it out with another skimmer. Some skimmers are WiFi or Bluetooth enabled and allow the suspect to download account numbers through a laptop computer.

The second way is through the tampering of card readers at terminals. Places that have been breached this way in the last few years are Michaels, Target, Kmart and Home Depot.

The third way is through lost and stolen cards. Even though lost and stolen cards account for only 2% of fraud loss, it still important to be aware of how easy it is for someone to use your actual card, especially nowadays where identification is not asked for as often.

What can you do as a consumer?

  • Inspect the ATM, gas pump, or credit card reader before using it. Be suspicious if you see anything loose, crooked, or damaged, or if you notice scratches or adhesive/tape residue.
  • Give your financial institution your cell phone number. A home phone number does no good if your financial institution is trying to contact you if your card ever gets compromised.
  • Make a habit out of constantly checking your mobile/online banking transactions and pending authorizations in your bank accounts. Notify your financial institution or credit card company immediately if you see a transaction that is not yours.
  • Consistently monitor your credit report. You can get a free credit report once a year from the three credit bureaus (Equifax, Experian, TransUnion). Simply visit annualcreditreport.com.
  • At some financial institutions, like Aventa Credit Union, we send out outbound text messages if ever your card is compromised. It will ask you to reply yes or no to see if a recent transaction is yours. If you reply yes, that’s the end of the communication.  If you reply no, then a live person calls you to walk you through the steps.

This post was submitted as a part of Money Smart Week by Aventa Credit Union. Aventa was founded in 1957 by the Colorado Springs Utilities Department. Today, it has grown to more than 21,000 members and $160 million in assets. The credit union offers a wide-variety of financial products and services throughout their branches in Colorado Springs, Pueblo and the San Luis Valley. For more information, visit aventa.com.