US Secret Service Investigates Card Skimming Fraud

US Secret Service Investigates Card Skimming Fraud
A credit card is placed into a credit card machine for processing payments in La Puente, Calif, on Sept. 11, 2023. (Frederic J. Brown/AFP via Getty Images)

The United States Secret Service (USSS) exposed multiple instances of card skimming fraud as part of an outreach program in Florida, preventing over a million dollars in potential losses.

In skimming hacks, devices are illegally installed inside or on ATMs, fuel pumps, or point-of-sale (POS) terminals which capture data from inserted cards. Devices can also record PIN entries made by cardholders. The stolen data is then used to create fake payment cards that enable fraudsters to withdraw money from the victim’s accounts and make unauthorized purchases.

On June 20, the Secret Service together with multiple state and local law enforcement partners from Florida “visited more than 472 businesses to inspect for, and remove, illegal skimming devices from ATMs, gas pumps, and point-of-sale terminals. In total, 13 skimming devices were recovered during the operation preventing an estimated potential loss of $1.3 million,” said a June 21 USSS press release.

“Overall, more than 3,500 point-of-sale terminals, gas pumps, and ATMs were inspected. The teams also distributed educational materials about EBT fraud and skimming to local businesses to help them better identify the warning signs of illegal skimming devices.”

Electronic benefits transfer (EBT) is a system through which the federal Supplemental Nutrition Assistance Program (SNAP) is distributed to recipients. Beneficiaries receive an electronic card similar to a debit or credit card with a magnetic strip and PIN. People use the card at participating stores, ATMs, and POS terminals.

According to the FBI, EBT card data has become a key target for skimming criminals. EBT data is appealing as a majority of cards are not chip-enabled. Cards with embedded microchips offer higher security in regard to payments and withdrawals.

“Criminals typically cash out EBT cash benefits (those available for withdrawal at ATMs) right after these accounts receive monthly funding. This often occurs between midnight and 6 a.m. the day the benefits become available.”

USSS also pointed out that criminal groups target EBT information as many states use magnetic strips at ATMs instead of the newer chip technology.

Over the past 18 months, law enforcement agencies have seen a “nationwide increase” in skimming incidents, with a focus on EBT cards, the agency said.

According to the Secret Service, this is the first time the agency has conducted an outreach operation on the issue in Florida.

Skimming is estimated to cost customers and financial institutions over $1 billion annually, according to the FBI.

US Skimming Hacks

In April, three men from Romania were arrested in Oakland after they were suspected of using skimming devices to steal EBT benefits.

After allegedly stealing victims’ data, the defendants loaded the information into blank or repurposed debit cards that were used to make purchases or withdraw cash, said an April 4 press release from the U.S. Attorney’s Office, Northern District of California.

The victims were largely from low-income families who depended on EBT benefits to pay for food and other necessities.

Last year, a man from Los Angeles was sentenced to over three years in prison after being found guilty of building card skimmers that were then illegally installed at gas pumps in Southern California.

Co-defendants in the case were alleged to have stolen almost $620,000 through the scheme, with the person who built the skimmers getting almost $250,000. Defendants were alleged to have either made unauthorized cards with the stolen information, sold the data to third parties, or directly withdrew the victim’s funds.

The FBI advises people to use debit and credit cards with chip technology since there are “fewer devices in the U.S. that steal chip data than magnetic strip data.”

The agency warned Americans against using debit cards if accounts of multiple individuals are linked. If the card got compromised, criminals would automatically gain access to all the linked accounts.

From The Epoch Times