Hackers are becoming increasingly inventive, and real-world credit card fraud is now a growing concern. As per the U.S. Federal Trade Commission (FTC), credit card fraud was the most commonly reported type of identity theft in 2023, with over 400,000 cases.
According to a recent study, 33% of all credit card fraud happens through physical skimming and shimming devices, while contactless payment hacks are becoming more frequent.
As consumers increasingly rely on digital payments, the need to stay alert to these dangers is greater than ever. Here’s how credit card fraud schemes work and how you can protect yourself from becoming a victim.
How Hackers Steal Credit Card Information in the Real World
1. Skimming Devices at ATMs and Point-of-Sale (POS) Systems
One of the most common ways hackers steal credit card information is through skimming devices. These devices are installed on ATMs, gas station pumps, or POS terminals in retail stores and restaurants.
A skimmer reads the magnetic strip on your card as you swipe it, capturing your credit card number, expiration date, and sometimes your PIN. Once the hacker has this information, they can clone your card or make fraudulent purchases online.
Some advanced skimming devices are difficult to detect because they are placed over legitimate card readers and look almost identical. Hackers may also use tiny cameras to record you entering your PIN, giving them full access to your account.
2. Shimming Attacks on Chip Cards
Shimming is a newer method that targets credit and debit cards with EMV chips. Hackers insert a small, paper-thin device called a “shim” into the card reader slot, which records data from the chip as it is read by the machine. Shimming is harder to detect than skimming because the shim device is hidden inside the reader, making it invisible to the naked eye.
While chip cards are generally more secure than magnetic stripe cards, shimming attacks can still extract enough data to create fraudulent transactions, especially for online purchases.
3. RFID and Contactless Payment Hacks
Many credit cards and smartphones use Radio Frequency Identification (RFID) or Near Field Communication (NFC) technology for contactless payments. While convenient, these methods can be vulnerable to “relay attacks” or “e-skimming.”
Hackers can use portable RFID scanners to read and steal card information without physical contact. They simply need to be within a few feet of your card or phone to capture the necessary data.
Though RFID hacking is less common than skimming or shimming, it is still a real-world threat that consumers should be aware of.
How to Stay Safe from Real-World Credit Card Fraud
Inspect Card Readers Before Use
Before using an ATM or POS system, always inspect the card reader. Check for any loose or bulky parts around the card slot, keypad, or screen. If something looks suspicious, avoid using that machine and report it to the business or bank. Also, shield your PIN when entering it at ATMs or payment terminals to prevent anyone from watching or recording it.
Use Contactless Payment Cautiously
While contactless payments are convenient, they can be a security risk. Consider using digital wallets like Apple Pay or Google Pay, which offer encrypted transactions, instead of physical cards. If your card supports RFID, invest in an RFID-blocking wallet or card sleeve to prevent unauthorized scans.
Be Cautious with Public Wi-Fi
Avoid making transactions or entering sensitive information over public Wi-Fi networks. If you need to make a purchase online while on the go, use a virtual private network (VPN) to encrypt your connection. VPNs make it harder for hackers to intercept your data, even if you’re on an unsecured network.
Bolster Online Security And Stay Safe in the Digital World
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