Police warn of new chip-and-pin fraud

A new chip-and-pin device has been developed by fraudsters which allows them to tamper with chip-and-pin machines.

The new scam was unveiled yesterday as police raided a counterfeit card factory in Birmingham and discovered technology being used to steal consumer’s details and make fake cards.

Police are warning consumers that the devices are hidden inside checkout card machines, with petrol stations most likely to be targeted.

Around 30 terminals in the UK have been affected by the new device, according to police.

Thieves can steal the card readers and install a hidden device which logs information when a customer enters their pin number.

The reader is then put back in a shop, supermarket or petrol station, sometimes with the collusion of an employee.

The information is then used to create fake cards to withdraw cash in countries where chip-and-pin has not yet been launched.

Chip-and-pin was launched in the UK in February 2006 and has been regarded as a success in the reduction of card fraud.

According to the UK Payments Association, Apacs, in the last 3 years, losses on face-to-face transactions on High Street transactions dropped from £218.8 million in 2004 to £73 million, as a result of chip-and-pin.

The organisation said chip-and-pin remains the safest method of payment for purchases of goods and services, however, it was never claimed to be foolproof.

Card fraud overseas has risen by 77% last year to £208 million. Chip-and-pin cards are to be launched throughout Europe by 2010.

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