How Thieves Copy Credit and Debit Cards and Drain Accounts
By ELISABETH LEAMY – ABC News
May 2, 2008—
While your ATM card is tucked in your wallet, thieves half a world away could be cloning it and using it. The crime is called “white card fraud,” and ABC News investigated just how easy it is for thieves to make a copy of your card and use it to drain your account.
It’s difficult to get an exact figure, but it’s estimated that identity thieves net an estimated $345 million this way every year. Gary Burkey of Wilmington, Del., discovered somebody was withdrawing money from his account at ATM machines in a part of Pennsylvania he had never even visited.
Criminals get people’s numbers in a variety of ways. One way they capture card numbers is by installing skimmer devices over the slot where you insert your card when you use an ATM.
They also use hidden cameras to record your PIN. Miami Beach police have actual footage from a crook’s camera in Florida that shows a victim inputting his PIN. Clear as day: 1-4-2-6.
“What makes this really sneaky, really devious, is once the criminals get the account information, they wait on it for a little while, said Cpl. Jeff Whitmarsh of the Delaware State Police. They replicate the cards and when the consumer least expects, that’s when they go in and hit the account.”
ABC News found the machines used to copy cards for sale right on the Internet, even though there are very few legitimate uses for them. We had our choice of 30 machines and bought one for about $500. We were even able to request priority shipping and received the package the next day.
ABC took the device to Chris O’Ferrell, an ethical hacker for a computer company called Command Information, which helps the federal government secure its systems.
We handed over an ABC News credit card and O’Ferrell swiped it so the machine could capture the information on the magnetic strip. Right away, the data popped up on the computer screen: name and account information.
With another swipe, O’Ferrell transferred it to a blank white card that came with our kit. Any card with a magnetic strip can be made into a clone — gift cards, hotel key cards, etc.
In less than five seconds, we had a duplicate credit card.
“That’s it. That’s all there is to it,.” O’Ferrell said.
We cloned an ATM card too. At one point we even accidentally deleted the data on one of our source cards, but since we had a clone, we were able to put the data back on.
Once we had clones of our cards, the question was, would they work? We tried the Visa card out at a gas pump. Without actually making a purchase (we didn’t want to violate any laws) we inserted the card to see if it would get authorized.
When the “lift the handle and begin fueling” message came up, we knew our clone was working. We tested the cloned ATM card by checking our balance at an ATM machine. When the screen read “Hello Elisabeth Leamy,” that was our first clue that that one was working.
It’s a bonanza for crooks. They used to have to risk going into stores to buy pricey merchandise, which they then sold for cash. Now they can just drain ATMs. Authorities say specialized crews do nothing but hit ATMs, cashing out on behalf of other identity thieves and taking a commission. One Bulgarian gang pulled $200,000 out of a single cash machine in Florida.
More than 65 other countries in Europe, Asia and South America now use smart chip technology that makes card cloning almost impossible. But the United States has stayed with magnetic strips to avoid the cost of converting ATMs. By one estimate, we have 400,000 cash machines in this country.
“It’s totally unacceptable,” O’Ferrell said. “It makes it extremely easy for the criminals to clone our cards and steal our identities.” Experts say since U.S. credit and debit cards are so much easier to tap, U.S. cardholders have become targets.
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