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Gas pump 'skimming' scheme larger than 2 arrested, police believe
Mar 05, 2010 (The Sacramento Bee - McClatchy-Tribune Information Services via COMTEX) --
It started as a routine check on a gasoline pump.
It blossomed into the unraveling of a suspected "skimming" scam that authorities believe was bilking $20,000 a day from Northern California debit and credit card holders, including $43,000 from customers at a Rocklin AM/PM service station.
Martinez police detectives on Feb. 26 arrested two Southern California men on suspicion of installing illegal data-capturing devices inside card readers at gasoline pumps. Police have recommended that prosecutors file 32 counts of identity fraud, conspiracy and enhanced charges related to gang activity.
"We don't think it's just these two guys," said Martinez Police Cmdr. Gary Peterson.
This kind of skimming is fairly rare, say law enforcement and retail experts. But it's a highly sophisticated crime that bedevils retailers who must balance security with service to customers who have come to enjoy the ease of swiping their plastic through card readers to pay for gasoline and a growing number of services and products.
Eleven skimming devices, each loaded with information for as many as 400 to 500 accounts, were found in the car in which David Karapetyan, 31, and Zhirayr Zamanyan, 30, were stopped by detectives from the Martinez Police Department.
Using keys that are standardized and widely available -- much like keys to golf carts -- the two suspects opened gas pumps and installed devices inside to capture information from the card readers, Peterson said. The process can be done quickly without arousing much suspicion, he said.
For the next driver who pulls up to the pump, there are no clues that anything is out of the ordinary.
Other types of skimming use miniature cameras to record strokes on the keypad or use devices attached around the card reader that could be spotted by careful observers.
Once the skimming devices are retrieved, information they have captured can be sold or used to make counterfeit debit and credit cards.
The ongoing Northern California scam was broken when an employee at a 7-Eleven store in Martinez was changing receipt tape at a pump and spotted a device inside, Peterson said. He called detectives, who replaced it with a decoy device and waited for someone to retrieve it.
Officers said they watched Karapetyan and Zamanyan remove the fake device, then followed and arrested them.
Because the two suspects were caught with a GPS device that had the addresses of "numerous" gasoline stations punched in, Peterson's department is waiting to hear from other service stations.
Service stations in the Sacramento area and other Bay Area cities have reported finding six skimming devices, Peterson said. He's gotten calls from authorities in Washington, Oklahoma and Texas who've had similar cases, but no links have been established with the local case.
Two skimming devices at the AM/PM at Sunset Boulevard and Park Drive in Rocklin were discovered in December after a customer complained about unauthorized transactions on a debit card, said Rocklin Police Lt. Lon Milka. Investigators are going through evidence to see if the device is linked to the Martinez bust.
AM/PM's corporate owner, BP Petroleum, declined to discuss security measures. An employee who answered the phone at the Rocklin store declined to comment.
7-Eleven corporate representatives did not respond to telephone calls seeking comment.
One thing security experts and law enforcement seem to agree on: There's no sure-fire remedy for such highly sophisticated skimming.
"If you look at a high-volume retailer, and you've got clerks busy servicing people on the inside, they just can't keep an eye on all 16 pumps," said Gray Taylor, a consultant who was formerly responsible for research and technology for the National Association of Convenience Stores.
The organization is particularly focused on the problem because of the 700,000 service station pumps in the country with card readers, he said.
There are no solid dollar amounts on the annual amount stolen by skimming, said Joseph LaRocca, senior asset protection adviser for the National Retail Federation.
In the type of skimming hitting service stations, thieves can gather a high volume of data quickly with relatively low risk by choosing terminals at busy retail locations.
The card system is deeply flawed, said Taylor, from the convenience stores association. "We are looking for fundamental changes in how cards work," he said.
The dominant card technology in the domestic market, which embeds information in a magnetic stripe, is outdated compared to safer "chip and pin" technology used in Europe, Taylor said.
Not only are skimming devices widely available, but they are getting smaller and more sophisticated, he said. Technology now allows thieves to use certain cell phones to harvest card numbers wirelessly, he said. They won't even have to retrieve the devices.
The organization is pressing for federal reform on card security.
The industry is also looking at training at the store level so employees can recognize tampering and break-ins and institute regular inspections of the pumps.
"Every employee of a retail company needs to have data security on their mind," he said. In the future, a Web site could identify service stations that have undergone extra measures to ensure card safety, Taylor said.
Although consumers are upset and inconvenienced by the theft of their card information, bank policies mean they aren't necessarily out all their money, said LaRocca.
"The consumers are protected. That's the good news," he said. But for retailers, there's more on the line, he said.
"It always impacts the brand, even if you got all your money back," he said. "It makes you think twice about going back."
Editor's Note: This story was changed March 5. Police have not connected the Rocklin and Martinez cases, but investigators are searching for links, according to Rocklin police.
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Call The Bee's M.S. Enkoji, (916) 321-1106.
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to
http://www.sacbee.com/. Copyright (c) 2010, The Sacramento Bee, Calif.
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