Don't Pay at the Pump

Crime never gets old, and old crime never seems to go away.

• By Ralph C. Jensen
• Jul 01, 2011

If there is a will, there will always be a way for bad actors to steal money,or in this case, steal an identity. Card skimming has resurfaced as a thief’s easy mark. In West Covina, Calif., a public awareness campaign is underway because city police have uncovered card-skimming devices at self-service gasoline stations. Customers were advised not to even use the pay-at-the-pump card readers because fraudsters had installed skimming devices that were collecting magnetic strip details and PINs.

Card-skimming schemes are not new, and they seem to target consumers when they are most vulnerable—while making a quick withdrawal at an ATM or, now, while trying to fill up the tank and be on their way.

Last year, police in Florida also issued warnings about paying at the pump, urging motorists to go insideand pay with cash. And, as recent as May, authorities in Hawaii had arrested three suspects they believed were linked to a skimming scheme at gas terminals. In fact, Hawaii extradited one suspect from California on three counts of first-degree identity theft after he allegedly stole more than $150,000 from six Hawaii financial institutions using credit and debit card information swiped from 156 consumer accounts.

You probably wouldn’t even recognize a skimming device if you used one while fueling up the family gasguzzling SUV. However, at a Shell station in Alachua, Fla., in May, a service technician found a skimming device while doing routing maintenance at a pay-at-the-pump terminal.

With that discovery, it was quickly surmised that skimming is not limited to ATMs. With fossil fuel at about the price of gold per ounce, it seems logical that thieves would strike gas stations, and now banks and financial institutions have to consider this as a vulnerability on payment card transactions.

“We have had a lot of experience in the past with credit card fraud and have a lot of intelligence in place to actually capture card usage and then use that to detect any anomalies in the card usage, and then that often gets used to stop the fraud before it is committed,” said Jerry Silva, founder of PG Silva Consulting. “And I am sure you know, as much traveling as you do, you occasionally receive the phone call from Visa or MasterCard or American Express, making sure that you are the one that is actually using the card. In effect, the consumer is almost always protected from any loss as long as it has been reported in a timely manner.”

The problem with credit cards and fraud is that if a person has the card number and the PIN, and if they are correct, the transaction will go through. There is nothing to prevent that from happening.

In the West Covina case, Raghi Khajemtourian, 26, and Arman Avenesyan, 31, were arrested after police discovered counterfeit cards and about $6,000 in their possession. Thanks to an anonymous tip, the two men were arrested after they were acting suspiciously near one of the compromised gas pumps.

Gas pumps, like ATMs, are often self-service payment terminals, making them vulnerable to skimming. But what also makes them so vulnerable is that there is widespread use of universal access keys, allowing fraudsters easy access to the gas pump enclosure. Gas terminal manufacturers and retailers are aware of the problem, but until they address the issue by requiring a unique code or key entry for individual devices, card-issuers say that pay-at-the-pump skimming is likely to continue.

This begs the question of how pervasive skimming attacks are and how they stack up against cyber attacks, which we hear about all the time in the business news.

Card skimming affects thousands of cards at a time during a single event. You have to take into account that when a skimming event takes place, it’s typically not just one person behind the theft but rather a group of people skimming together, affecting thousands of people and thousands of accounts all at once.

Data breaches are a completely different animal. A data breach goes much deeper because when a store loses this information, it will contain the consumer’s personal data, which can include account numbers and Social Security numbers.

Consider this: You are the individual who has been hacked. Once the fraudsters get enough information about you, they have the ability to open accounts, move balances, close legitimate access and close accounts. The hacker is limited only by the total amount of your account balance. With your information, the thieves are then able to establish other relationships, and I’m talking about credit relationships, and they likely will destroy your credit history and credit reputation.

Here’s the real rub between skimming and data breaches: As thieves become more intelligent and more connected, it will become more difficult to separate skimming from a data breach. Why? Because it is all going to be connected.

Pay at the pump is part of a much larger security matter. Self-service devices that now accept payments pay little attention to card data protection. Standards are needed at the kiosk that takes payment information, similar to those already in place at ATMs.

This article originally appeared in the July 2011 issue of Security Today.