the cardholder's name, and the invisible encrypted verification code. The chip in the skimmer can hold information for up to three hundred cards. The data can then be readily downloaded onto a computer and used to make counterfeit cards.
That's precisely what was going on in The Plantation. A waiter kept a skimmer concealed inside his jacket. When a customer gave him his card, he stealthily swiped it in his skimmer before taking it to the cashier. He did it in a flash. He then sold the numbers to a criminal ring.
This sort of chain has become increasingly common. It goes on in department stores, hotels, and gas stations, as well as restaurants. Card numbers are picked up by the sales help and then e-mailed to card-cloning mills, all for money. Often the mills are run by organized crime syndicates, and they could be anywhere in the world. In essence, these rings operate counterfeit card factories. With a thermal dye printer, they put the colored graphics onto what's known as "white plastic," a blank card with a magnetic stripe on the back. Next, an embosser adds the victim's name and account number. Then an encoder puts the verification code onto the magnetic stripe.
The final touch is to apply a hologram onto the face of the card. Since 1981, credit card companies have used holograms to guard against fraud, but one upshot of this has been the emergence of sizable counterfeit hologram operations in Taiwan, Hong Kong, and China. Smugglers regularly bring fraudulent holograms into the United States, and sell them for five dollars to fifteen dollars apiece. On a legitimate card, the hologram is embedded in the plastic when the card is manufactured. On a counterfeit card, a hologram decal is attached to the card. If you examine the card closely, you should be able to feel a decal protruding slightly above the surface of the card.
Skimming is an immense problem. With stolen credit cards, the criminal has a narrow time frame in which to make purchases, but with skimmed cards nobody knows these cards are out there until a victim gets his statement, which can be more than thirty days after the crime took place. That's a lot of time to rack up illegal charges.
The skimming threat has worsened because the skimmers have gotten smaller. A few years ago, the forerunners of today's tiny skimmers were devices the size of portable computers. They would be concealed under gas station counters, where attendants would run cards through them without the customers' knowledge. The miniature versions came out in early 1999.
Some of the credit card companies are trying to use computer analyses to fool skimmers. Say someone in Taiwan tries to buy something with a card that hours earlier was used in Wisconsin. The computer could be programmed to reject the transaction. But given the gigantic number of cards in circulation, it gets expensive to do this and isn't practical on a large scale.
THE FUTURE GETS SMART
The technology of the future is Smart Cards. These are credit card - sized plastic cards that contain an integrated circuit chip instead of a magnetic stripe. It's the chip that makes it "smart." In essence, it's a credit card outfitted with a "brain." The card is actually more powerful than the first desktop computer. That little chip can store a hundred times more information than a magnetic stripe, which is limited to just three lines of information: your name, the account number, and your PIN number.
A Smart Card chip can be configured to include everything a person needs and replace all of his other credit cards, phone cards, and health care cards. For example, you go to a store and buy a turtleneck sweater and hand the clerk a Smart Card. The clerk asks what account do you want it on: Visa, American Express, Macy's? They're all on that chip. So your Smart Card is a full-fledged electronic wallet. Someday, we'll even have a Smart Card driver's license. When the police stop you, they run the card through a reader and your entire driver's record will come up. Hawaii has already been experimenting with these.
Smart Cards were invented in France and have been around for about twenty years. Billions of them are already in use throughout the world - in Western Europe, South America, Asia, and Australia - but it's going to be a few more years before they become widespread in the United States. For that to happen, merchants have to be willing to