There are some places you simply don't use a debit card. A restaurant, for example, if the server takes the payment from the table to the cash register. A good rule of thumb is to never pay with a debit card if you can't see the card at all times.
It may be time to add gas stations where you pay at the pump to the list of places where you should not use a debit card. Scammers are able to use two different techniques to steal card data and both are increasingly difficult for consumers to detect, until they look at their next statement.
What's happening in Wisconsin provides a good illustration. The state Department of Agriculture, Trade and Consumer Protection has issued a consumer alert, warning that “skimmers” have been founded at numerous gas stations across the state.
Two types of skimmers
The department said its inspectors have found two types of skimmers. External devices fit over the actual card reader on the gas pump. When the consumer swipes a debit card, it can steal the data and record the PIN.
Internal skimmers can be even harder to detect. They typically are made of a simple cable with an in-line recording device that runs between the card reader and the main board. It records the card data, which is later retrieved.
"A consumer may likely have no indication that they used an altered dispenser until they find a discrepancy on their bank statements," said Frank Frassetto, Division Administrator of Trade and Consumer Protection.
Frassetto says the best defense is to closely monitor bank and credit card statements, looking for discrepancies. However, only using a credit card, rather than a debit card at pay-at-the-pump stations, will provide an extra level of protection.
Fraudulent charges on your credit card are usually limited to no more than $50 if promptly reported. But a thief with access to your debit card data can clean out your bank account. Some banks have policies that limit consumer losses in the event of this kind of fraud, but policies vary from bank to bank.
Meanwhile, it's best to avoid getting entangled in this kind of fraud, regardless of the payment type you are using. Wisconsin consumer authorities say you should quickly inspect a gas pump's card reader before sliding your card in the slot.
First, lightly wiggle the keypad. External skimmers may feel loose, or even fall off with pressure. Internal skimmers are harder to spot, but check to see if any security seals have been broken on the dispenser cabinet. That's a sign of tampering.
And just because this rash of skimmers was uncovered in Wisconsin doesn't mean you can relax if you live in Ohio. Scams are not limited by geography. This fraud was exposed in Wisconsin only because inspectors there found it. It could easily be happening where you live, but it just hasn't been uncovered yet.