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Why Your Debit and Credit Card are Dangerously Insecure Payment Methods

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The Florida Department of Agriculture and Consumer Services says thieves using sophisticated card skimmers stole millions of dollars from unsuspecting retail customers throughout Florida in 2019.

The department regularly inspects gas pumps as part of a statewide crackdown on skimmers and have discovered the devices on gas pumps throughout the state, with the hardest hit area being Tampa Bay.

Through the first six months of 2019 over 900 skimmers were discovered on gas pumps alone.

Florida is known for beaches, sunshine, Disney, but also fraud. The fact is, Florida has the highest fraud rate per capita in the nation, with $84 million lost to fraud in 2018, about $400 lost per person.

Florida consumers filed 15 percent of the 1.4 million fraud reports to the FTC in 2018, while accounting for only 6.5 percent of the population.

With that being said, obviously, this type of fraud isn’t only a Florida problem.

The reality is, it’s estimated that 80% of credit and debit cards in circulation today have been compromised at some point.

To make matters worse, according to the Federal Reserves’ 2019 Federal Reserve Payments Study, total card payments grew to 131.2 billion transactions in 2018, totaling $7.08 trillion.

That’s up from 29.7 billion transactions totaling $1.56 trillion in 2015. In other words, card use continues to increase as less people carry cash.

The way the most common fraud works at the gas pumps is thieves use skimmers, which are small electronic devices illegally installed inside pumps that collect your information.

More sophisticated skimmers are Bluetooth-equipped, allowing the thief to sit nearby and gather card information without ever visiting the pump.

Basically, when you swipe your card, the card reader gets a snapshot of your name, card number and expiration date.

If a criminal has installed a card skimmer in a point-of-sale terminal, they can extract all three of those pieces of information to make online or in-person purchases with your card information.

Another thing is, customers using chip and PIN credit or debit cards can still suffer from the same security issues.

That’s because chip and PIN cards still have the same magstripes on them that are easy to swipe your data from.

Skimmers can be installed on any point of purchase system, whether at the gas pumps or inside a retail store where criminals simply distract employees while they install the skimmer.

With this in mind, I want to share with you the best ways to keep your credit or debit card safe, including the most secure way to make payments.

Use your Smartphone. You might be surprised to hear this, but the safest way of making in-person payments is using smartphone-based mobile payments.

In other words, using contactless methods such as smartphone apps like Apple Pay, Google Pay, and Samsung Pay provide a more secure means of payment than your standard credit and debit cards.

The way it works is, whenever you have your phone contact the payment reader, it actually sends a different number than your credit card.

In other words, the merchant can’t get your actual credit card number.

Every time it uses a unique number that is not linked to your credit card number.

The only drawback is not all stores accept this form of payment, however more and more retailers are installing systems that will.

Ask your bank about a prepaid card. Most people are familiar with prepaid credit cards that you can buy at most retailers.

However, you should contact your primary bank and ask them about their prepaid cards that can easily be reloaded using your main account.

For instance, if you bank at Wells Fargo you should inquire about their Wells Fargo EasyPay card.

The way it works is that you can get a prepaid card, just like one from a store, but one from your specific bank will be more convenient to use since you can reload it easily, set up direct transfers, and directly deposit money onto the specific card.

Set up lots of notifications. These days, online banking gives you the ability to set up notifications about your spending habits.

You can set things up to receive a text or e-mail anytime $100 is spent or you can set up notifications when your account hits a certain minimum amount.

Most banks allow you to set up notifications that you can tailor to your specific needs so you can quickly see if any fraud is taking place.

While I realize most of us are inundated with texts and e-mails, I would definitely recommend setting up notifications from your bank, this way you will immediately know of any suspicious purchases on your account.

Chances are you pay for most things with either a debit or credit card.

These days, most people are carrying less and less cash, but using plastic no doubt comes with risks that can quickly lead to a financial mess if your bank accounts are compromised.

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