Credit Card Skimmers

Credit card skimmers on gas pumps are a major inconvenience for consumers whose personal account information has been compromised and results in millions of dollars in financial losses for banks throughout the state.

Through months of negotiations and stakeholder meetings, Rep. Mary Ann Perez was able to bring gas station owners, state agencies, financial institutions and law enforcement together in agreement to combat card skimmers at gas pumps.

Over the last few years the Houston Police Department, along with Police Organizations across the state, have recognized a significant increase in credit card abuse and "skimming" cases across the state. In these cases, the perpetrators utilize electronic devices placed inside of the point of sales system on fuel pumps, or externally on an ATM machine, with the purpose of capturing the account data stored electronically on a credit or debit card.

Banks are reporting that Texas represents 42% of loss suffered by their institutions nationwide. In Texas, it is difficult to find a room of individuals where at least 75% of them have not fallen victim to this crime. In speaking with suspects involved with this criminal activity they have pointed out that Texas is favorable for their activity because we are ill equipped to deal with the problem. Arrested suspects say that Texas is so widespread geographically there is a wealth of opportunity due to our large volume of commerce. [Even more importantly, the Houston area is responsible for 28% of the credit card fraud nationwide.]{.underline}

In the case of "gas pump skimmers," the suspect will take the credit and debit card numbers obtained from the pumps and then reprogram the magnetic stripe on the back of another prepaid Walmart card, Greendot card, a blank white plastic card or a completely counterfeit card produced and printed for this purpose. The magnetic stripe will now contain all that is necessary to make a purchase with victim's account.

In cases involving these suspects who work in groups and travel to commit their crimes, the account holders may be in a different state or country. In House Bill 2624, changes are present that will allow prosecutors to adjudicate the case in any county where the offense was committed or in the county where the victim resides. It also utilizes a current article in the Criminal Code of Procedure that provides that the bank, or any other entity victimized by the crime, may be the victim in the case.

House Bill 2625 addresses a long-standing issue with the prosecution of these cases. Many times, when we arrest the individuals who are responsible for "gas pump" or "ATM skimming", they have multiple counterfeit cards in their possession. Sometimes they have hundreds of victims' account numbers in their possession on the counterfeit cards in their possession.

Currently, the only way that we can prosecute the defendant at higher than a state jail felony is to utilize Texas Penal Code 32.51 Fraudulent Use or Possession of Identifying Information. Since this crime was intended to be utilized against an individual defendant, committing the offense of identity theft requires the investigators to contact every single account holder to determine whether they gave consent for their card number to be programmed to a magnetic stripe on a counterfeit card.

It would also require that we bring these account holders as witnesses to trial (almost impossible). The creation of Sec. 32.2315 would provide a much more applicable statute for prosecution of these defendants who choose to traffic, use, or produce these counterfeit cards.

House Bill 2945 is part of the Business and Commerce Code and gives the Texas Department of Agriculture the right to inspect and check for skimming devices on fuel pumps. In addition, it provides penalties for those gas stations that are repeatedly found with skimming devices on their pumps but refuse to upgrade the security of their pumps. There are several relatively inexpensive measures that can be put into place that would make it extremely difficult for suspects to successfully place skimming devices on fuel pumps.

House Bill 2945 amends the Business & Commerce Code by giving the Attorney General (AG) rulemaking authority to prevent skimmer installations on fuel pumps.

Once a card skimmer is found on a fuel pump, the pump must be shut down and local law enforcement shall be contacted within 24 hours.

Once a report has been made to the state agency that is in charge of weights and measures at fuel pumps, they shall immediately notify the fusion center and contact law enforcement to inspect the pump. As the AG will introduce "best practices" to gas station owners, a violation will result in oversight by the agency to make sure they are complying, or they can require employee training.

The bill amends the Government Code by allowing the creation of a fusion center in the City of Tyler. This is under the supervision of the Attorney General for the sole purpose of combatting payment fraud. This will be housed in the Texans Against Gangs (TAG) Center that is being placed in Tyler.