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What Is Credit Card Cloning?
Credit card cloning is the electronic theft of data from a credit card to enable unauthorized charges in the victim's name. This practice is also called credit card skimming.
The theft occurs at a credit card terminal, using an electronic device to capture and transfer data from the stolen card to another card.
Security improvements—such as the use of personal identification numbers (PINs) and chip cards—help protect against these types of attacks.
Key Takeaways
- Credit card cloning involves stealing card information using a concealed scanner.
- Thieves capture the data to make unauthorized purchases or sell it on the dark web.
- The use of encrypted chip cards has helped disrupt this type of theft.
How Credit Card Cloning Works
There are several ways to clone a credit card, none of which involve theft of the physical credit card. Thieves can rig a legitimate ATM with an electronic attachment that captures and stores the necessary information. The data is then ready to be used digitally or to be downloaded onto the magnetic strip of another physical credit card.
The card's owner is usually unaware of the theft until the charges start rolling in.
The theft is more difficult if the card requires a personal identification number (PIN) number in addition to a magnetic strip, such as in the case of debit cards. The PIN would need to be observed and recorded. This can be difficult to accomplish, adding additional protection against having your card compromised.
Chip Cards Deter Theft
Relatively recent security enhancements have made it more difficult for thieves to clone credit cards.
Modern chip cards—which store sensitive information on an embedded microchip—are much harder to compromise because the data is encrypted within the chip. Even if the thieves successfully access the chip card, they would not be able to use the information.
Even this type of technology isn't foolproof although older cards with only magnetic stripes are much easier targets.
Thieves have figured out how to target chip cards through a practice called shimming. A paper-thin device known as a shim can be slipped into a card reader slot to copy the information stored on a chip card.
Example of Cloning
A popular method of cloning requires the installation of hidden scanners on legitimate card-reading devices such as gas station pumps, automated teller machines (ATMs), or the point-of-sale (POS) machines in retail stores.
These attacks do not require the cooperation of the personnel working at those stores. The thieves just collect data on an ongoing basis from the hidden scanners, without the customers, employees, or business owners being aware of the breach.
How to Protect Yourself Against Credit Card Cloning
You can defend against credit card cloning by taking the following precautions:
Inspect a Card Reader Before Using It
Take a moment to inspect the card reader before you insert your card. If something looks suspicious, don’t use it.
Some skimming devices can be bulky. Others just look a little klutzy.
Monitor Your Card Accounts
Monitor your credit card and bank accounts regularly for unauthorized purchases.
Check your balance and recent transactions online often, even daily.
Sign Up for Alerts
Most banks and credit card issuers allow you to sign up for alerts. You'll get an email or text message when certain activity occurs on your accounts, such as a withdrawal or a new charge exceeding an amount you specify.
Stick to Bank ATMs
Some ATM locations are more vulnerable than others. Gas stations and deli kiosks are favorite targets because the thieves can install their devices with less likelihood of being observed.
Your safest bet is to stick with an ATM that is inside a bank.
Use a Chip Reader
Always use a chip reader rather than swiping your card.
While cloning is still possible with a chip card, it is more difficult to pull off.
Opt for Contactless Payment
If your credit or debit card has a contactless payment feature, use it. Your card is more difficult to hack if it's not inserted into a terminal.
Chip cards are also known as EMV cards—short for Europay, MasterCard, and Visa. These three companies collaborated to produce a global protocol for credit card security that is widely used today.
What to Do When Your Credit Card Is Cloned
If you believe your card has been cloned, your credit card company or bank should be the first call you make. The more quickly you cancel the card, the less time thieves have to rack up charges.
The good news is that consumers are not typically responsible for fraudulent charges. The Fair Credit Billing Act limits the liability to $50 if the theft is reported quickly.
Are Credit Cards with Chips Harder to Clone?
Yes, a card that uses a chip is more secure. The standard EMV chip technology uses a unique and encrypted code for every transaction you make. Most newly-issued cards have EMV chips and most terminals use the technology. They are not 100% safe, though. Stay wary.
Are There Common Credit Card Scams Other Than Cloning?
Yes. The simplest way to use someone else's credit card illegally is to get hold of the physical card and pile up charges before the loss is discovered.
Other ways include pfishing scams by phone, email, or text. These usually come disguised as urgent communications from a legitimate company that you do business with.
Yet another tactic is the fake credit card application. A thief who has your personal information can apply for credit in your name.
Who Investigates Credit Card Cloning?
The banks that issue credit cards, debit cards, and cash cards are the most active investigators of credit card cloning and other fraudulent activities related to credit. They have the most to lose.
Credit card fraud is usually prosecuted by the states. Fraud that involves foreign players may be prosecuted by federal investigators.
The Bottom Line
Countless consumers have been victimized by credit card fraud. One of the most common types of fraud, credit card cloning, has become harder to pull off with the widespread adoption of EMV chip technology. That doesn't mean it's impossible. You can defend against credit card fraud by frequently checking your accounts for unauthorized charges or withdrawals, and alerting the issuer immediately if you see a problem.
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