September 26, 2017 - 3:49 pm
Swiping your card at a gasoline pump in Las Vegas is just as dangerous as ever, according to the Metropolitan Police Department.
Card manufactures may have added chips, but pumps still use old technology that read the magnetic stripes on the cards, leaving them vulnerable to skimming devices that record data. Metro police recently found eight at just one gas station.
But that is just one element of what Metro detective Jefferson Grace described as a massive fraud problem that is getting tougher to quash as criminals perfect their craft and banks and police cut back on investigators.
“As for counterfeit cards, we have seen a drastic increase in them. And it is getting, I hate to say it’s out of control, but it really is. It’s unbelievable,” Grace told attendees Monday at the 16th annual Anti-Money Laundering and Financial Crime Conference.
The three-day conference runs through Wednesday at Aria and is closed to the public.
“If we hoped the chip would be the solution, it isn’t,” he said.
The U.S. banking system followed Europe’s lead in fighting fraud by switching in 2015 to chip-based cards, which have improved encryption.
However, the U.S. didn’t use Europe’s system of requiring a PIN to confirm each transaction, a feature that adds another layer of protection.
Worse yet, the U.S. still permitted stores to swipe cards if they didn’t have a chip or if the chip didn’t work. Gas stations were also given to Oct. 1, 2017, to shift to the chip technology. However, that date has been pushed back three years.
That lets criminal groups not only continue to use skimming devices that fit right over gasoline pump card readers to steal card data, but also swipe fraudulent cards at retail stores. Skimmers can be bought on Amazon for $10, Grace said.
“We had a group exploiting that vulnerability,” Grace told hundreds of people at the conference.
Many of the criminal groups running skimming and credit card fraud operations in the U.S. come from Eastern Europe and the former Soviet Union, including Bulgaria, Romania, Russia, Armenia and Georgia, said Joseph Gillespie, an FBI unit chief, who was part of the four-man panel.
“They have excelled at this. It is becoming a major thing in my unit, and they are the ones that are pretty much the best at it,” he told attendees.
The criminal gangs move from city to city to avoid detection, said Gillespie. Their major targets are the Southwest, including Los Angeles, Phoenix and Las Vegas; New York, Miami and Chicago, Gillepsie and Grace said.
The gangs generally use counterfeit cards from foreign banks and use them on weekends when banks are closed. Some banks may authorize a transaction, initially deducting just a $1 from a $5,000 or $10,000 credit line.
That enables the gangs to charge $100,000 on such cards over a weekend. The gangs know which stores to target and when to target them, Grace said.
Even if all point-of-sales stopped accepting the old magnetic stripe technology, it would not solve the card fraud problem.
Criminals have learned to steal chip data, said Grace, something previously thought impossible.
Banks don’t believe him, he told the audience.
Banks had been liable for credit card fraud when the magnetic stripe was in use. Thus, banks had a team of investigators that would work with local police, said Grace.
Once cards moved to the chip, retailers became responsible for covering fraud, and banks downsized their fraud investigative teams, he told the audience.
Contact Todd Prince at email@example.com or 702-383-0386. Follow @toddprincetv on Twitter.
By the numbers
Victims of credit card fraud in the U.S. rose 16 percent last year to a record 15.4 million consumers, driven by online card fraud, according to Javelin Strategy & Research. The fraud totaled $16 billion.