How it works:
With credit cards, a thief might use your card or obtain a new card in your name, perhaps by stealing a pre-approved card application from your mail and having the card sent to a different address. Or he or she might counterfeit your current credit card. One scenario: The crook or an accomplice might work at a retail establishment--perhaps a bar or restaurant--where the card briefly may be out of sight. This person can swipe your card through an electronic "skimming" device that captures key account information from the card's magnetic strip.
As for ATM cards (which deduct amounts taken at automated teller machines from your checking or savings account) and debit cards (which deduct for cash or payments transacted at ATMs or retail establishments), the perpetrator might steal an existing card or make a new one. He or she also might obtain your personal identification number (PIN)--the security code you use to authorize transactions.
One way potential thieves might try to learn your PIN is to watch you type it as they look over your shoulder (even using binoculars, a telescope, or a video camera to try to see it). Another tactic used by criminals is to attach a keystroke recording device to an ATM or checkout register, perhaps at a gas station, convenience store, or other establishment where customers may be in too much of a hurry to notice something suspicious. Yet another way to obtain a PIN is to trick a consumer into divulging the numbers in response to a deceptive call or e-mail (a process commonly known as "phishing").
Check your bank and credit card statements as soon as they arrive and immediately report any unusual or unauthorized transactions. Or better yet, don't wait for the statements, but be more proactive by going online frequently to check your recent transactions for suspicious activity.
Remember that criminals steal credit card solicitations, bank statements, and other important papers out of mailboxes, so take precautions with your incoming and outgoing mail (see "Ten Simple Things You Can Do to Fight Fraud"). Also, contact your financial institution if your credit, debit or ATM card is lost, stolen or stuck inside an ATM. Never give your credit card or debit card number or PIN in response to an unsolicited e-mail or phone call. Never write your PIN on your card or on a piece of paper in your walletmemorize the number instead.
Avoid ATMs in dark or remote areas or if people seem to be loitering by the machines. Steer clear of anyone offering to "help" you carry out a transaction--it may be a setup. Walk away if it appears that any machines may have been tampered with or if there's a sign directing you to use one of multiple machines--the one that may be rigged with a keystroke recorder or a plastic insert that grabs cards until the criminals come for them.
Be very skeptical if a retail employee swipes your credit or debit card through two devices instead of one--the second device could be a skimmer for recording your account information. If you spot a suspicious employee or machine at a retail establishment, report it to a manager. If you still have concerns, report it to your card issuer's fraud department. Always take your credit, debit and ATM receipts with you--never leave them for a crook to find useful account information printed on the receipts.