By Dan Herbeck
NEWS STAFF REPORTER

Skimmer fraud is a growing international problem, according to police, and it all starts with a process that is so routine that it happens millions of times every single day at businesses all over the world.

A customer walks into a store or restaurant, makes a purchase and hands a credit card to a cashier. The cashier then swipes the card through an electronic device that reads the information on the card.

Usually the purchase is approved, but sometimes a dishonest cashier also swipes the card through a small, illegal, hand-held device called a skimmer.

This device — no bigger than a pager — steals information from the card and activates a form of identity theft that causes headaches for consumers and, in recent years, has cost credit card companies billions of dollars.

Fraud experts say these scams occur every day — often on a much bigger scale — in businesses all over the world. Some of the skimming operations are run by organized crime.

“Credit card scams and shady waiters can easily turn customers into identity theft victims,” said Dawn Handschuh of CreditFYI.com, an online educational forum on personal finance issues.

“Credit card skimming occurs when someone swipes the magnetic strip on a customer’s credit card to get the account number with a device small enough to hide in a pocket or hand. It takes about two seconds.”

Skimmers usually cost a few hundred dollars and can be purchased over the Internet, police said. Some Web sites even offer information on how to make such a device.

In Europe, a growing number of restaurants are fighting this form of fraud by using small portable devices that allow consumers to pay their bill at their table. A limited number of restaurants in the United States have begun using them.

“Industry and law enforcement sources estimate credit card fraud losses exceed a billion dollars annually. And it’s no wonder why, when thousands of skimmed credit card numbers can be sold and e-mailed anywhere around the globe in seconds,” the Consumer Affairs office of the State of Georgia said in a recent advisory on skimming.

Skimming affects every consumer because fraudulent credit transactions are sometimes charged back to the merchant who accepted the card. The merchant ultimately winds up raising prices to make up for the losses, the Georgia office said.

Authorities also warn about a second form of skimming that does not require the participation of dishonest cashiers. Some skimming rings have learned how to install skimming devices on automated teller machines, gasoline pumps and other legitimate devices that read credit cards or banking cards.

According to federal prosecutors in Orange County, Calif., a man pleaded guilty in 2007 after agents learned that he put illegal skimming devices on gas pumps at several gas stations in the region.  The man admitted that he obtained credit card and debit card information from 90 customers and then used the information to steal $186,000 from his victims’ accounts.