Threat Management

Report: Secret Service warns of crooks swapping out chips on stolen debit cards

Financial institutions were reportedly warned in a memo by the U.S. Secret Service of a new scam whereby thieves intercept debit cards in the mail, remove their chips and replace them with older or invalid ones, and begin using the stolen chips when their rightful owner activates the sabotaged card.

Security blogger Brian Krebs reported the scheme in a Apr. 5 blog post, noting that the reason the perpetrators don't just use the stolen cards as is, is because "presumably they lack the privileged information needed to do that. So, they change out the chip and send the card on to the legitimate account holder and then wait for it to be activated."

According to Krebs, the criminals are targeting cards sent to larger corporations because they obviously have access to more funds. The crooks separate chips from their cards using a heat source that warms the glue, and place them into an older payment card. The stolen card receives a replacement chip that does not work, and is repackaged and sent along to the intended recipient, which activates the card, thinking nothing is unusual. At this point, the thieves can begin emptying the victim company's account.

Krebs says the Secret Service memo does not indicate the point in the mail process where the criminals are taking possession of the cards. "It could well involve U.S. Postal Service employees (or another delivery service), or perhaps the thieves are somehow gaining access to company mailboxes directly," Krebs writes. "Either way, this alert shows the extent to which some thieves will go to target high-value customers."

Bradley Barth

As director of multimedia content strategy at CyberRisk Alliance, Bradley Barth develops content for online conferences, webcasts, podcasts video/multimedia projects — often serving as moderator or host. For nearly six years, he wrote and reported for SC Media as deputy editor and, before that, senior reporter. He was previously a program executive with the tech-focused PR firm Voxus. Past journalistic experience includes stints as business editor at Executive Technology, a staff writer at New York Sportscene and a freelance journalist covering travel and entertainment. In his spare time, Bradley also writes screenplays.

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