Central Bank alert on credit cards

The Central Bank has alerted the public on the risks involved in using credit cards due to skimming and duplicating (cloning) of cards. The warning came after a credit card scam was carried out in Britain by an organized group of criminals linked to the LTTE.

“With technological innovations, fraudsters, thieves and organized criminal gangs have invented new methods to skim and clone the cards and use these cards without the knowledge of cardholders. Such frauds create various risks inclusive of financial losses to both cardholders and card issuers,” the bank said in a statement.

The UK scam said to be running for several years involved cloning credit or debit card information and stealing the personal identification number (PIN) during transactions and then extracting small amounts of money from the cardholders’ bank accounts over a period of time without the knowledge of cardholders.

The Bank said various scams on payment cards have been reported from many other countries too and urged Sri Lankans to be cautious in using electronic payment cards and to mitigate potential risks involved in using these cards.

Electronic payment cards come in three forms -- credit cards, debit cards and pre-paid cards. Credit cards and its uses are well known while debit cards can be used to purchase goods and services through payments made directly from the cardholders’ bank accounts to merchants’ accounts. Prepaid cards are issued for a specific value of money paid in advance to the card issuer. The cards can be used to purchase goods and services up to the pre-paid value. The Bank said skimming is a technique by which thieves capture your personal or account information from the card. An electronic device used to capture this information is called a “skimmer”, which can copy all the information contained in the magnetic strip on the card. Since skimming devices are so small and easy to hide, it is not difficult for fraudsters to skim the card without the knowledge of the cardholder.
The statement gave two examples for skimming at restaurants and ATMs

It said many fraudsters have been known to employ some restaurant-serving staff to capture credit card information. “You may be surprised to know that a server may carry a skimming device in their apron, belt or somewhere close-by. Your card may be scanned twice, one for your genuine payment transaction and another in the skimming device to capture your credit card information for fraudulent use of the card. Skimming may be performed by sales personnel too at the time you make a purchase.” At ATMs a "card trapping" device is inserted by fraudsters to scan the card and to store/copy the card’s confidential information or even to trap the card in the ATM.The Bank said card users should closely monitor anyone who handles the card like when being used to process a payment by a waiter or sales personnel.

It said credit cards should be kept at a low credit limit, credit or debit cards not in use should be cancelled, confirm transactions through an SMS, collect receipts from ATMs, teller windows, gasoline pumps, or with the sales personnel, be careful when using cards overseas especially countries where skimming in large scale has been reported, don’t use cards to make payments through unknown Internet web sites or unknown e-mail requests, and check transactions details and account balances frequently.