We may hope that all criminals are dumb, but the fact is some are pretty smart. And some of the smartest tend to be fraudsters. October saw two scandals break that demonstrate how at risk your personal credit card information can be in the hands of some organizations.

Credit card fraud by the book

First up, was Barnes & Noble, the nation’s biggest bookseller. On Oct. 25, The Los Angeles Times reported that the retailer had discovered compromised payment terminals in 63 of its stores across the country.

Sophisticated criminals had, in effect, “bugged” the terminals, allowing them to access the critical card information needed to clone plastic. That was bad enough for credit card users, but those who’d paid with debit cards faced an added risk: their personal identification numbers (PINs) could also have been captured.

Barnes & Noble says that it acted promptly to plug the leak, immediately disconnecting all similar devices in every one of its 6,000+ stores.

Credit card security in a poor state

Just a day after The Times’s report appeared, USA Today revealed an equally worrying leak of card information. Foreign hackers had accessed the South Carolina Department of Revenue’s database, and stolen 387,000 debit and credit card numbers. True, all but 16,000 of those were encrypted, but nobody was sure whether hackers who were sophisticated enough to access the department’s secure IT systems might also be sufficiently savvy to break the encryption code.

In many ways, South Carolina’s data loss was potentially more worrying than Barnes & Nobles’. That’s because the criminals also got away with 3.6 million Social Security numbers. If the hackers manage to marry these with card data, the potential for identity theft would grow exponentially.

What to do if you’re a victim

As well as suggesting a whole new definition for the term “unsecured credit cards,” these stories — along with the countless ones that preceded them — show that anyone, no matter how careful, can become a victim of card fraud and identity theft. What should you do if you one day find yourself in that position? The Secret Service’s website suggests a plan:

1. Immediately inform the police, and obtain and retain a copy of your police report.
2. Call your credit card companies at once, and follow up with a confirmatory letter. Ask for replacement cards with new numbers. For the sake of your credit report, also request that this be recorded as: “Account closed at consumer’s request.”
3. Call the fraud departments of all the big-three credit bureaus, Equifax, Experian and TransUnion. Ask that they flag your record, and that they verify directly with you any future credit card and other finance applications in your name.
4. Call the Federal Trade Commission’s toll-free help desk on 877-FTC-HELP (382-4357).
5. Keep a written record of every call you make (date, time, to whom you spoke, what was said and agreed…)

Everyone here at IndexCreditCards.com hopes you’ll never find yourself having to implement that plan.

Published 11/28/12