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SACRAMENTO, Calif. – Information skimmed from debit cards and included with the cards’ personal identification numbers brings between $30 and $50 on the street when thieves sell them to counterfeiters who then manufacture fake cards and use them to loot cardholders’ checking accounts. That is one of the revealing pieces of information flowing from an investigation of a debit card skimming scheme which the $1.1 billion Safe Credit Union, headquartered in North Highlands, California, a suburb of Sacramento, played a key role. Local police and federal officials find the case particularly interesting because it demonstrates the increasing sophistication of debit card skimming and fraud schemes. Relatively large rings of thieves operating out of different locations and moving the card data swiftly to counterfeiters have been seen in Europe for several years, but have been slower to appear in the U.S. “We found out about it when we started having our members having their checking accounts cleaned out,” explained Vanessa Otto, the loss prevention manager for the credit union. Otto added that the credit union first began to see the problem in December of 2003 and a subsequent police investigation found that a ring of thieves had been operating out of four Sacramento area service stations and convenience stores. The card compromises came in the stores themselves, Otto explained. Cardholders who purchased their gas at the pump and didn’t buy anything from the store, were not affected. But some cardholders who made a purchase in the store were asked to hand their card to a store employee on the excuse that the store’s point of sale terminal was broken or required an additional step. The compromised employee would then watch the customer enter their personal identification number, upside down from the employee’s perspective, and include it with the skimmed card data. Otto reported that 48 of its members had their card data compromised. The police allowed the thieves to continue skimming in an effort to catch the counterfeiters, Otto said. “As far was we have heard, the card data and PIN number brings between $30 and $50 dollars when sold to card counterfeiters in San Francisco, Los Angeles or Las Vegas,” Otto said. The incident has also spurred a high degree of cooperation between most of the locally based credit unions and banks in the Sacramento area, all of whom sent representatives to a March meeting on ways to improve card security. Area wide the police have estimated that up to $250,000 may have been taken in the scam. No law enforcement official would speak on the record about this investigation, citing its ongoing nature. One however commented that that this ring was new to the Sacramento area in terms of its organization and relative flexibility. It’s clear that they have used different sub-organizations to help recruit people to run the skimmers and to collect the data and then a very rapid mechanism for moving the card data to a buyer, he explained. Other instances of this type of fraud have not been nearly as organized or efficient. -

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