Earlier this week PayPal President David Marcus disclosed that his credit card was hacked and used for fraudulent purchases. Although it has not yet been precisely determined where his card was hacked, it is known that the security breach did not occur as a result of one of the many major hackings in the news, such as at Target or Neiman Marcus. Instead, it is thought that the security breach occurred at the hotel at which he was staying or at stores he shopped at during a recent trip to the United Kingdom by way of a skimmer, which is a small electronic device that is used by many identity thieves who surreptitiously install the device on retail card processors or ATM machines. When the credit card is processed through the legitimate card processing machine, the skimmer captures and sends the card information to the identity thief. What makes this particularly interesting is that Marcus’ card was one of the advanced EMV chip cards, which generates a new number every time it is used and, which we were told, would have eliminated the problem experienced at Target because it generates a new number for every transaction electronically processed. So how could his number have been stolen? Easy. When cards are used by identity thieves for online purchases, the chip does not produce a new transaction number so although the thieves could not have used the number for in-store purchases, the EMV chip card does not protect against online use.
Whether you have a new EMV chip card or, as most of us do, the old style magnetic strip card, you have to be vigilant about monitoring your credit card statement for fraudulent use. Don’t wait until the end of the month when you receive your monthly statement to check for fraudulent purchases. Go online at least a couple of times a month to look for unauthorized use. In addition, whenever you swipe your card through an ATM machine or credit card processing device, examine the device carefully for evidence of tampering through the installation of a skimmer. Often with a little care you can identify the problem before it occurs.