This morning, I was sitting at work when a call came in from the fraud prevention center for the bank with whom I have a business credit card. Apparently, they had noticed a sudden, sharp increase of activity on my card and were calling to investigate.

I could recall two recent purchases with my business credit card: a tank of gas during a business trip, and a subscription to The Hedghog Review. But as the woman on the line began reading off some of the recent charges to my card, it became evident that someone had been using my card to do their Christmas shopping. (When she named a Wal-Mart purchase of $175, the nail was in the coffin. My longtime Ferry Dust readers may remember that I do not shop at Wal-Mart.)

In all, there are nearly $1,000 in fraudulant charges on my business credit card, many of which were made with the actual card present. How is this possible, you ask?

Skimming.

As I learned today, "skimming" is not just a term for one of my chores as a child (as in, using a net to skim the bugs out of our swimming pool, as in, "Christy, it's your turn to skim the pool." "But Dad, I hate skimming the pool!")

According to Wikipedia,

"Skimming is the theft of credit card information used in an otherwise legitimate transaction. It is typically an 'inside job" by a dishonest employee of a legitimate merchant. The thief can procure a victim’s credit card number using basic methods such as photocopying receipts or more advanced methods such as using a small electronic device (skimmer) to swipe and store hundreds of victims’ credit card numbers. Common scenarios for skimming are restaurants or bars where the skimmer has possession of the victim's credit card out of their immediate view.^[7] The thief may also use a small keypad to unobtrusively transcribe the 3 or 4 digit Card Security Code which is not present on the magnetic strip.

Instances of skimming have been reported where the perpetrator has put a device over the card slot of a ATM (automated teller machine), which reads the magnetic strip as the user unknowingly passes their card through it. These devices are often used in conjunction with a pinhole camera to read the user's PIN at the same time.^[8]

Skimming is difficult for the typical cardholder to detect, but given a large enough sample, it is fairly easy for the card issuer to detect. The issuer collects a list of all the cardholders who have complained about fraudulent transactions, and then uses data mining to discover relationships among them and the merchants they use. For example, if many of the cardholders use a particular merchant, that merchant can be directly investigated. Sophisticated algorithms can also search for patterns of fraud. Merchants must ensure the physical security of their terminals, and penalties for merchants can be severe if they are compromised, ranging from large fines by the issuer to complete exclusion from the system, which can be a death blow to businesses such as restaurants where credit card transactions are the norm.

According to my new friend Theresa, in Fraud prevention, this is most likely what happened.

I feel so violated. Thankfully, IAM (my employer) will not be responsible for any of the fraudulant charges, and thankfully there are people whose job it is to monitor these things. (For the record, all of this has happened in the past six days or so, and I do, in fact, monitor my charges every couple of weeks, when I do my expense reporting.)

So as a service to you, my CL readers, I want to offer some tips for Fraud Prevention this Christmas season. Click here for a full report, but there are three things that I learned from this experience, which I want to leave you with:

• When  you use your credit card in person (as opposed to online), don't let your card out of your site.
• Only use your card at reputable stores to reduce the chance of being "skimmed."
• Log on to your bank at least once a week to monitor activity on your accounts.