Skimming: What It Is, How Identity Thieves Use It

What Is Skimming?

Skimming is a method used by identity thieves to capture payment and personal information from a credit card holder. Several approaches can be used by fraudsters to procure card information, with the most advanced approach involving a small device called a skimmer that reads the information stored in a card's magnetic strip or microchip.

Key Takeaways

  • Skimming is an illegal practice used by identity thieves to capture credit card information from a cardholder surreptitiously.
  • Fraudsters often use a device called a skimmer that can be installed at gas pumps or ATM machines to collect card data.
  • Some machines act like point-of-sale technology. An acquired card is swiped, and a touchpad allows the user to enter a security code.
  • Card users are warned to keep their cards in their sight at all times and to cover the pin pad when inputting security codes at ATMs.

How Skimming Works

Skimming can occur anytime a cardholder uses an electronic payment card at a brick-and-mortar location. Fraudsters can obtain information in various ways, and the technology that they use is becoming more sophisticated and challenging to detect.

Skimming allows identity thieves to capture information from a cardholder that can be used to make fraudulent transactions. Some fraudsters may simply photocopy or take digital photos of information that can be used fraudulently. Other more advanced technologies also exist, such as skimming devices designed for use in many different situations.

At brick-and-mortar locations, a fraudster can use a small skimming device that allows them to swipe a card and obtain information from its magnetic strip. Some skimmers may also include a touchpad that allows the thief to enter a security code.

Skimming technology is becoming more sophisticated each year, and it is difficult for authorities to stay one step ahead. Some skimmers are as thin as a credit card and can be inserted into ATM machines and gas pumps.

Thieves can also build skimming devices that can be used at automated teller machines (ATMs) and other point-of-sale locations such as gas stations. Skimming devices can be installed on an ATM with cameras and overlay touchpads can be added to capture individual personal identification numbers. Gas stations are another target where skimming devices can be easily installed since card readers are often outside at the gas pump and separate from a checkout.

Mitigating Compromised Card Information

Cardholders should be cautious of any suspicious devices involved with an electronic payment. In some situations, skimmers can be easily detected if a thief uses more than one device to complete an electronic transaction.

To avoid having their card skimmed, cardholders should maintain possession of their card or keep it in sight at all times. Dining at restaurants with a collective checkout can also help to ensure a card is not compromised when taken from the cardholder.

In 2021, two men were sentenced to 75 months in federal prison for an ATM skimming fraud that resulted in $587,529.50 in losses to financial institutions located in Michigan, Nebraska, and Iowa.

Many businesses will integrate electronic fraud security systems into their payment process, which can protect them from all types of fraudulent approaches and cyber attacks. Payment card companies are also broadening their solutions for security and fraud prevention.

Cardholders can check with their individual issuers through customer representatives or online resources to gain greater insight into any services or solutions that may be available to increase card security and mitigate compromised card information.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. FBI. "Romanian Nationals Sentenced To Federal Prison For ATM Skimming." Accessed May 24, 2021.

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.