PANAMA CITY — Antiquated credit card scams will be edging toward extinction in the coming year, but it will get much worse before it gets better, according to local law enforcement.
With the widespread implementation of new credit card chip technology in the coming year, authorities expect significantly less occurrences of fraud. The chips will render nearly all current scams obsolete — save for the most sophisticated. But with the deadline looming, Bay County authorities are preparing for a surge in reports of banking accounts inexplicably coming up short over the holidays, according to BCSO officials.
“Most of those [credit card] numbers they have now have a shelf life, and the bad guys know that,” said BCSO fraud investigator Craig Romans. “So everybody is in a rush to use that info and we are expecting them to start using those numbers while they can.”
Some fraudsters have built up large caches of credit card information acquired by dubious means, such as skimmers on gas pumps, ATMs or drive-through windows at fast food restaurants. Much of that information is sold online to the highest bidder. That information then can be put on any card with a magnetic strip so that scammers don’t need the stolen card present.
Since the credit card information is simply a binary code linked to one specific banking account, massive amounts of those codes could have been collected and stored without a “last call” on their use. The last call for the already stolen credit card numbers has been announced for October 2015, and the value of those binary codes are dropping daily until the implementation, which will cause a spike in use of that information.
“With there now being a shelf life, many more credit card numbers are being sold and the prices of those are continually dropping,” Romans said.
Previously in the U.S., only information from the cards magnetic strip and a personal identification number were needed to use the card — and sometimes only the information on the magnetic strip. The chip adds a third identifier to credit and debit cards that must be present at the time of a transaction.
To ensure retailers comply with the new chip requirements in October, the banks will be passing on losses from scams to those retailers who accepted cards without the chip.
“The merchant will eat those and not the banks,” said fraud investigator Paul Vecker.
More than 20 million cards with the chips have been circulated so far, but more than 400 million will have to be implemented by next October.
The best way to protect banking information until that date is to monitor banking accounts closely and report any instance of even the smallest suspicious amount that comes up.
Unfortunately, fraud investigators don’t expect the credit chip to put scammers out of a job anytime soon.
One example of a persisting scam law enforcement anticipate to see more of, despite the card chips, is the recently publicized IRS scams. Several Bay County residents have reported unsolicited calls from alleged IRS staffers claiming they owe back taxes. The person is then told to buy a Green Dot card, a form of a gift card, and give them the information from that card.
Once that information is transferred to the scammer, it is highly unlikely to be retrieved without an arrest.
“The chips make scamming more difficult, if not nearly impossible,” Vecker said. “But whether you have a 6-foot or 8-foot-high fence around your house, somebody’s going to jump the fence if they want in bad enough.”