A California supermarket chain recently sent letters informing customers that a security breach had been discovered at 20 of their stores. The breach notification letter released by Lucky Supermarkets reads, in part:

“Dear Lucky Customer:

In the course of regular store maintenance, we discovered our credit/debit card readers at the self-check lanes ONLY in 20 stores (listed below) had been tampered with. Steps were taken immediately to remove the tampered card readers in the affected stores, as well as enhance security to every credit/debit card reader in all 234 stores in our company. We are not aware nor have we been notified of any reports that customer accounts were compromised.”

The “tampering” referenced in this letter has been described as skimming, which occurs when a separate piece of hardware is affixed to an ATM or point-of-sale terminal. The hardware is designed to blend in with the face of the machine and record card data whenever a card is swiped. Criminals either remove the skimming device later or retrieve data remotely via wireless Bluetooth or mobile SMS.

In this particular case, however, it isn’t clear exactly what happened. What is known is that the POS terminals were compromised. When point-of-sale terminals have been compromised in the past, this has usually meant that criminals actually entered the store, physically removed an entire machine, and replaced it with one that resembled the original, but had been tweaked to capture and transmit customer data.

Consumers cannot protect themselves from this crime. All they can do is check their bank statements frequently and refute any unauthorized charges or withdrawals. On the other hand, online retailers who are subject to having stolen credit cards used on their sites can, in many cases, prevent fraudulent transactions upfront by checking the device’s reputation used during the transaction. Computers, tablets and smartphones are assessed for fraud, high-risk and suspicious activity in real-time, which means while that device is interacting with the retailer’s website.  By checking against iovation Inc.’s global shared database of more than 800 million unique devices and their associations, online retailers can protect themselves against chargeback losses, shipping fraud, account takeovers and identity theft attempts.

Robert Siciliano, personal security and identity theft expert contributor to iovation, discusses POS skimming on CBS. Disclosures.

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