The technology behind the chip credit card was intended to eliminate much of the credit card and debt card fraud that was formerly easy to accomplish with the older magnetic strip credit and debit cards which contained all of the account information on the magnetic strip on the back of the card which could be surreptitiously read through a device called a skimmer which is easily installed on ATMs and gas pumps.  In addition, hacking into credit card processing systems could also enable a hacker to obtain the card number for fraudulent use.  To a great extent these problems have been eliminated through the use of the chip cards which generate a new number each time the card is used.  Thus a skimmer would be of no use because it would only capture a number used to process a single transaction that could not be used again.  Online credit and debit card purchases still are susceptible to fraud because the chip cannot be used in those transactions.

However, while the chip card has reduced credit card fraud, enterprising scammers have recently come up with a way to manipulate your credit card or debit card for fraudulent purchases.  The ingenious tactic the scammers use was detailed in a Secret Service warning to financial institutions around the country.  Scammers intercept mail or delivery service deliveries of debit cards being sent in large numbers to companies who provide them to their employees.  The scammers then remove the chip and then glue on an old or otherwise invalid chip on the card and repackage it for delivery.  The unsuspecting company then receives the cards and activates them without being aware of the tampering that has occurred.  Once the card has been activated, the scammer uses the card to purchase goods which it then sells to obtain cash while the legitimate card holder learns that the card is inoperable when he or she tries to use the card with the phony chip.


While to date, reports of this scam have been limited to criminals intercepting large numbers of cards going to corporations and other large organizations, it can be expected that this scam will work its way down to ordinary criminals exploiting individual card holders because it does not require much  skill and technology to perform this scam.  In addition, criminals taking advantage of the Informed Delivery Service of the U.S. Postal Service can learn ahead of time if you are going to receive a new credit card and be waiting to grab the card and make the switch.  Here is a link to the Scam of the day for March 30, 2019 in which I described the Informed Delivery Service and how you can protect yourself from being a victim of scammers using this service.

Whenever you get a new chip debit card or credit card in the mail, look for signs of tampering such as burn damage around the chip where heat is used to install the new phony chip.   Also look on the card for possible bubbling on the card which can be an indication of tampering through the heating of the card.  Finally,  look for a small hole in the plastic near the chip where the original chip may have been pried off of the card.

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