Crime gangs target chip and pin machines

POLICE are gearing up to tackle a new threat from fraudsters that could leave Welsh consumers’ bank accounts at risk of being plundered.

Officers are to urge shops to tighten security after it was revealed crime gangs are using the chip and pin system to raid bank accounts.

It is believed customers in about 30 shops across the UK have had their card details stolen and although South Wales Police said they have had no reports of it happening here, they are preparing for the possibility.

An officer from the fraud and financial investigation unit has begun speaking to retailers about beefing up their security.

Detective Inspector Dave Lowe said: “We have had no reports of PED (pin entry device) thefts yet. But quite often this type of fraud will migrate down the M4.

“There’s no guarantee it will happen here but equally it’s an issue we need to think about.”

When it was rolled out across the UK in February 2006, chip and pin was hailed as a system that would make bank cards safer and as a direct result, card fraud fell by a quarter in the first six months.

But now officers from the Dedicated Cheque and Plastic Crime Unit (DCPCU) – the special police unit that tackles card fraud – have uncovered a scam where thieves substitute chip and pin terminals in shops for ones that have been tampered with.

The compromised machines allow the normal transaction to go through but also record the card details, allowing fraudsters to produce cloned cards which are then used in cash machines abroad to withdraw money from customers’ accounts.

The deception came to light when DCPCU officers raided an alleged counterfeit card factory in Birmingham this week.

Sandra Quinn, of the UK payments association Apacs, said: “Whereas fraudsters used to put pinhole cameras above the chip and pin device to get hold of the pin number, they now manipulate the chip and pin terminal to get that basic data.

“They are getting hold of the pin from inside the reader.

“They steal readers from retailers, cracking them open, and try to recreate one and then put it back in a shop.

“We have been aware that this has been going on because police have been getting reports that terminals are being stolen.”

Detective Inspector Lowe said shops in South Wales will be advised to check their chip and pin devices regularly. Petrol stations are thought to be particularly vulnerable.

But he added that manufacturers and banks have already begun working on improvements to the device, which could stop fraudsters in their tracks.

Chairman of the Cardiff Retail Partnership, David Hughes-Lewis, of Jonathan David Jewellers, said: “This is something we have to be wary of.

“It was almost inevitable fraudsters would find a way around chip and pin but at the same time I think it has cut down fraudulent transactions hugely.”

Both Gwent and North Wales Police said they were unaware of any incidents of chip and pin terminal fraud in their force areas, but urged retailers and customers to be on their guard.

The Western Mail contacted Dyfed-Powys police but no-one was available to comment.

South Wales’ fraud and financial investigation team is also tackling other types of identity fraud, which have been seen across the area.

Detective Inspector Lowe said phishing – where fraudsters sent bogus e-mails to bank customers asking for account details – and card skimming at cash machines were problems, but ID fraud in general was much less of a problem in Wales than in other parts of the UK, such as London and the south-east of England.

He said: “It is an important issue for us and we will keep putting the effort and resources into it to protect people.”

Jane Milne, of the British Retail Consortium, said: “Customers should be assured that UK retailers always take the protection of cardholder data seriously and are continuing to invest millions of pounds to enhance existing security measures.”