Yesterday, I was going through my statement from American Express and noticed that there were a large number of unfamiliar charges. Lots of them – to the tune of $1500, and all of the charges were in Los Angeles, CA. The list was quite entertaining, (especially because I didn’t have to pay for them):

• Some McDonald’s charges (I’m not being a snob or anything, but I do not eat there!)
• 2 tanning bed charges (Hey – they might get skin cancer.)
• Several Target stores purchases
• Beach Wear Store
• $90 dinner (Hope it was good.)
• The Gap
• Gas

I’m not a detective, but just for laughs, I’ll take a guess at the perpetrator’s identity. I’d say the suspect was a caucasian female, middle-income beach bunny in her 20′s.

The weird thing about these charges? The card was never out of my possession. I only use it to pay my web hosting services, office supplies and online postal fees. So technically, my card wasn’t stolen, my credit card information was stolen.

Being an informed consumer (ya think?), I called American Express to immediately cancel the card. The rep was very nice and took off all the charges, and verified with me that the card was still in my possession. The interesting thing: she told me that the charges were “swiped”, meaning that someone had a physical credit card and ran it through a Point of Sale (POS) device.

So how did they do it? The Amex Rep had an explanation. Employees in restaurants or stores may have hand-held devices used to scan a card and obtain the code hidden in the magnetic stripe so that it can be replicated and then sold to someone who uses it fraudulently. How scary! Notice this type theft does NOT occur in online purchases.

Of course, the other way to steal credit card information is just to have someone who holds the card could write down your name, card number, expiration date and the 3 digit number on the back (In AMEX’s case, it’s 4 numbers). This information is sold to someone who can use the information for online purchases.

You wonder why merchants at brick and mortar stores ask for ID when processing purchases with a credit card? Now you know. This also brings up another point which I’ve been telling people for years – giving your credit card information is much safer online than handing it to someone in a store or restaurant.

This practice has been going on for a long time, but it’s the first time it happened to me. Has this ever happened to you? Let us know by leaving a comment!

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