Personal Finance

Million Dollar Card Fraud Ring Foiled by Store's Loss Prevention Staff

  • Last Updated:
  • Jan 19th, 2010 8:31 pm
[OP]
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Aug 18, 2005
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Burlington-Hamilton

Million Dollar Card Fraud Ring Foiled by Store's Loss Prevention Staff

$1 million card fraud foiled
PIN pads swapped to collect customer information

City police believe a debit and credit card scam orchestrated by an out-of-province crime group has taken banks and local retailers and consumers for a loss of more than $1 million.

The brazen and sophisticated scheme unravelled when alert loss prevention officers at a grocery store in northwest Winnipeg allegedly caught the suspects attempting to steal several PIN (personal identification number) pads Monday.

(...)
Read more here at Canoe.ca.

This is just another example of why you should never ever ever use Interac for POS (point of sale) transactions. Even if you effectively protected your PIN with your hand, the PIN pad itself was compromised and transmitting the card magstripe and PIN information wirelessly to the crooks.

I wonder how long the victims of this crime had to wait before the bank returned their money during the fraud investigation. How many of them bounced cheques and payments? How many were unable to pay tuition or rent before the deadline due to fraud? How many fees and penalties did they rack up before their accounts were restored and money returned?

The chip+pin transactions will make this kind of crime more difficult, but I would still never use Interac debit except in case of an emergency.

If your non-chip credit card got caught in this fraud, you would just have to phone in the fraudulent transaction when you saw it, and unless they could prove that you did it, you're off the hook and out NO money.
19 replies
Deal Addict
May 31, 2007
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They also put skimmers and face plates on ATM's. Walked into a cibc the other day, and the police were dismantling one. They said the douchbag was already arrested, thanks to the banks cameras.

I hope he resisted arrest, so he got a beat down to comply.
[OP]
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Aug 18, 2005
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wiggy wrote: I don't get why people have to live in terror of these things. They're convenient and things work out fine more often than not. If things were really so bad the system would pretty quickly cave in on itself and be abandoned.

http://www.informit.com/articles/article.aspx?p=394507
According to your article:
Security might be another reason why Americans are slower to adopt debit cards. Debit card fraud has been on the rise in Canada. Although the terminals and back-end systems are extremely secure, Fletcher says that the debit cards issued by the financial institutions are the weakest link, with debit card "skimming" becoming a problem. INTERAC Association reports that its members reimbursed $60 million to cardholders in 2004 because of skimming.
Pretty good article, actually.
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Jan 9, 2010
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Again, though, the real issue that causes people to be concerned is really only semantic.

For instance, you can read that paragraph:

Security might be another reason why Americans are slower to adopt debit cards. Debit card fraud has been on the rise in Canada. Although the terminals and back-end systems are extremely secure, Fletcher says that the debit cards issued by the financial institutions are the weakest link, with debit card "skimming" becoming a problem. INTERAC Association reports that its members reimbursed $60 million to cardholders in 2004 because of skimming.

And you might see the bolded bits, and leap to a Q.E.D. conclusion of "I'd better be careful of using debit cards."

But if you look closer, the words themselves are actually very vague. What does "debit card fraud has been on the rise" really mean? A 10% increase over two years? A 1% increase over five years? Is it statistically meaningful in any way? Even if there was a large percentage rise in fraud, if the starting percentage of fraud was, say, .0000001% of all transactions, then the large increase would technically still be "on the rise", but statistically very insignificant to you in real life.

And how about debit card skimming "becoming a problem"? To whom? How? To how many people? To the banks? The only answer is that cardholders in 2004 got $60 million reimbursed. Sounds impressive. But how many transactions was that? What percentage of debit transactions are skimmed? How much money changes hands without skimming? If $60 million was reimbursed and $100 trillion gazillion dollars' worth of debit transactions went fine, I'd say that $60 is a drop in the bucket.

These vague words really do people a disservice, as they lead people toward a conclusion that may OR may not be justified by actual facts.
Jr. Member
Nov 12, 2009
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canadave wrote: Again, though, the real issue that causes people to be concerned is really only semantic.

For instance, you can read that paragraph:

Security might be another reason why Americans are slower to adopt debit cards. Debit card fraud has been on the rise in Canada. Although the terminals and back-end systems are extremely secure, Fletcher says that the debit cards issued by the financial institutions are the weakest link, with debit card "skimming" becoming a problem. INTERAC Association reports that its members reimbursed $60 million to cardholders in 2004 because of skimming.

And you might see the bolded bits, and leap to a Q.E.D. conclusion of "I'd better be careful of using debit cards."

But if you look closer, the words themselves are actually very vague. What does "debit card fraud has been on the rise" really mean? A 10% increase over two years? A 1% increase over five years? Is it statistically meaningful in any way? Even if there was a large percentage rise in fraud, if the starting percentage of fraud was, say, .0000001% of all transactions, then the large increase would technically still be "on the rise", but statistically very insignificant to you in real life.

And how about debit card skimming "becoming a problem"? To whom? How? To how many people? To the banks? The only answer is that cardholders in 2004 got $60 million reimbursed. Sounds impressive. But how many transactions was that? What percentage of debit transactions are skimmed? How much money changes hands without skimming? If $60 million was reimbursed and $100 trillion gazillion dollars' worth of debit transactions went fine, I'd say that $60 is a drop in the bucket.

These vague words really do people a disservice, as they lead people toward a conclusion that may OR may not be justified by actual facts.

Very well said. You are right about that the facts have to be checked completely. However, at the same time, there are always intangible side effects that would occur and probably not accounted for. Such as the hassle that one might have to go through to deal with the banks to get the refunds. The time wasted. And if any checks are bounced because of this, the NSF charges not just from banks but say from landlords. Also, if you have to go to the branch to get new debit card or wait for one in the mail, there are situational loses also. At the end of the day (I hate to use that term), if the benefit of doubt leaves the consumer in a better position, why not. It is only going to better the awareness. On the other hand, because of these scares published, if somebody is going to get benefited (except the consumer), that's a different issue. Just my opinion.
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Jan 2, 2004
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Jucius Maximus wrote: Pretty good article, actually.
yeah, it is pretty good. Some interesting background and puts the debit card "problem" into perspective. With the changes coming in 2012-2014 the bad guys will be passing on debit cards and robbing all you guys carrying cash. :)

I've only ever had a problem with my card a couple times. Once there was cash removed from my account, but it all made it back in time for the mortgage payment. And the bank folks were accommodating in sorting stuff out.

I've twice had cards canceled when the bank was aware that some scammers had comprised some retail location - didn't lose any cash, just had to queue up for a new card.

I think as long as you're careful with your card and the bank accounts behind it, you should be okay. I only have one account accessible to my debit card and I don't keep all of/a ton of cash there. The rest stays out of reach.

Debit cards are just too convenient and I don't see why I should give that up out of fear of scammers.
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Jan 2, 2004
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canadave wrote: These vague words really do people a disservice, as they lead people toward a conclusion that may OR may not be justified by actual facts.
+1. Read the whole article. The problem is a very small slice of the whole thing.
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Nov 5, 2001
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[QUOTE]Thomas Wayne Hope, 25, and four 17-year-old boys are charged with theft- and fraud-related offences. All five are in custody.

One of the teens is facing similar charges in B.C., police said.
[/QUOTE]


And the one teen who is already facing charges in BC is on the street WHY?

He can kiss his chance goodbye of getting out on bail again...


Don't kid yourself. This is starting to turn into a huge problem, hence the switchover to chip and pin technology. Also the reason the pinpads are now bolted/cabled down in almost any major retailer.

I service atms for RBC, CIBC, President's Choice, Credit Union, Petro Canada and other businesses, and I deal with a couple of fraud inquiries a week, and have removed multiple skimming devices with the assistance of the EPS and RCMP. The problem is starting to get out of hand as well, and isn't going to get any better.

Any 2 bit hacker who knows basic electronics/soldering can create a skimming device for about $100. A few hours with plastics molding and painting and you can create an indetectable device that fits like a glove on an atm.

Same with creating a modded pinpad. There are tons of them on the grey market, so it is easy to get your hands on one for experimentation and fraud.

If the pinpad/atm isn't secure, don't use it. If you do, make sure you pay attention to your account statement.
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Dec 10, 2007
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wiggy wrote: I don't get why people have to live in terror of these things. They're convenient and things work out fine more often than not. If things were really so bad the system would pretty quickly cave in on itself and be abandoned.

http://www.informit.com/articles/article.aspx?p=394507
Because financial institutions decide to shift the cost of their lack of security to customers when it is these very same institutions who should bare the cost for the screw-up.
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Oct 26, 2009
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blainehamilton wrote: And the one teen who is already facing charges in BC is on the street WHY?

He can kiss his chance goodbye of getting out on bail again...


Don't kid yourself. This is starting to turn into a huge problem, hence the switchover to chip and pin technology. Also the reason the pinpads are now bolted/cabled down in almost any major retailer.

I service atms for RBC, CIBC, President's Choice, Credit Union, Petro Canada and other businesses, and I deal with a couple of fraud inquiries a week, and have removed multiple skimming devices with the assistance of the EPS and RCMP. The problem is starting to get out of hand as well, and isn't going to get any better.

Any 2 bit hacker who knows basic electronics/soldering can create a skimming device for about $100. A few hours with plastics molding and painting and you can create an indetectable device that fits like a glove on an atm.

Same with creating a modded pinpad. There are tons of them on the grey market, so it is easy to get your hands on one for experimentation and fraud.

If the pinpad/atm isn't secure, don't use it. If you do, make sure you pay attention to your account statement.
How can you tell if an ATM is modded?
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Oct 25, 2001
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The best tangible sign to those "not in the know" is how the banks are reacting to the situation. When the cost of fraud rises to the point that justifies action then you know it is a problem. First they tried shields but know they have had to upgrade software, firmware and hardware to combat the problem. It is a significant cost. Of course there is also the cost to a bank's image and the integrity of the system.

And if you are the last bank to address the situation you are going to be swamped by the deluge of the fraudsters.

Generally a banks ATM is safe to use as long as you do a good job covering up your PIN entry. Don't rely just on the shield. It actually unintentionally provides a good hiding spot for a camera.

As far as POS devices go you must be much more careful.

BTW - I work in the ATM industry.
[OP]
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muchacho_007 wrote: How can you tell if an ATM is modded?
You can't always tell.
In the past, some organized crime legitimately purchased and set up some white label ATMs that did legitimate transactions, dispensed money, etc. But they hacked the machines so they would also steal people's card and PIN info. Nothing you can do about that other than using your own bank's ATM in the branch, which would be harder to rig due to branch security, employees being around, etc.

But less sophisticated jobs can be seen when the crooks install some auxiliary reader on top of the machine's actual reader. (This is why those green sleeve things on the readers' slots now appear on many ATMs.)

Just be alert, aware of your surroundings. Watch what you're doing, etc. And go to ATMs in well lit, well trafficked areas, preferably within the bank branch.
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Feb 21, 2006
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Nobody worries about a problem until it happens to them. Then it's a big problem! I believe that all the debit card agreements say that you are solely responsible for any transactions made with your card number and PIN number, unless the bank can determine that it wasn't you. Fortunately it seems that most people get the money back.

But I have to say that in all the years I've been using debit cards at home and internationally, the only real problem I've had is with a legitimate bank machine that lost connection in the middle of a transaction and failed to dispense the cash. I had to argue back and forth for 6 months between two banks to get my money back after they twice tried to take it from my account. The procedure for sorting out a disputed transaction between two banks is slow, and it may take a long time to get your money back.
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Oct 12, 2005
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I'm not a fan of the "Chipped" cards. I prefer the old style with a double receipt and signing my signature. Now at gas stations the attendant turns, jams my card in and says "thank you come again" (no pun/irony intended).

It's MY time the banks are wasting when they lock my account and I have to go in during business hours to grab a replacement card.

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