Dumpster diving, a dishonest clerk imprinting a credit card or a scam to somehow get an account number are all ways thieves are getting their hands on credit card numbers.
It's something that happens all the time and many people don't even realize they're the victim.
Cathy Louis is a prime example. "I received a phone call from the Visa people, and they asked me if I was using my card, and that if I just bought something from Best Buy? I said, 'No, I hadn't'," said Louis.
One red flag for her credit card company was that Best Buy was 1,300 miles away in Minnesota!
"I have never been to Minnesota in my life," said Louis. "How does someone get my name, my card number?"
Unfortunately, it's not difficult. Thieves sell the numbers to one another often using underground websites.
They quickly rack up on big purchases, usually high-end electronics, costing retailers millions of dollars each year.
In turn, retailers have to jack up their prices to make up for the losses.
"They're basically trying to get things for free. It's no different than stealing and walking out with it, but more and more today, we're seeing a lot of it," said Secret Service Agent Luis Velez.
There are three main ways thieves doctor cards.
One is taking a legitimate credit card and replacing the information on the black magnetic strip with information from a stolen credit card. That's known as re-encoding. When a merchant swipes the now-bogus card, the information on the register does not match the name and account number on the front of the card. It looks like someone's else's card, but it's your account getting charged.
To make it look legitimate, they'll even forge what looks to be a real out-of-state ID card knowing most people do not know the look of every ID from every state.
"So when they go to a retailer, they'll present what appears to be a legitimate out-of-state license and what appears to be a legitimate debit/credit card to match it," said Velez.
Then there's making your own credit cards. They are blank cards thieves use to imprint a number and name on. It's called embossing.
The last popular method is counterfeit gift cards. The retailer thinks the customer is using a legitimate voucher, $20, $50, $100 or perhaps even more. When in actuality, the person is using someone else's stolen credit card number.
"They re-emboss these, re-encode these with the stolen numbers in the back, and it makes it easier because they don't have to present a driver's license because there's no name on them," said Velez.
Even though it's a scam costing retailers and all of us millions of dollars, it's one that Velez said is very difficult to track because of the nature of business.
Below are some tips to keep you from falling victim.
To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357).
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