Chip and PIN ATM Skimming Credit Card fraud

Even though they're criminals, you got to marvel at their ingenuity. You are about to see the extraordinary lengths to which identity thieves will go to steal your credit card information. So will those new chips on all of our cards make any difference? ABC's Nick Watt tonight on what you can do to protect your money.

A gas station, Miami Beach, Florida. Watch the chatty guy in the tight aquamarine polo. He points the clerk to distracted. While she's gone, watch his alleged accomplice. In mere seconds, he slips an identical cover over the store's card reader, a device police believe will automatically steal your card details when you think you're just making a purchase. You'll have no idea you've just been skimmed. Robert Siciliano is a cybercrime expert.

Unfortunately, when it comes to stealing credit card information, it's as easy as swiping your card in any skimming device.

Now watch this. A hidden camera inside a gas pump in Arizona. Those fingers, an alleged thief apparently searching for the skimmers he'd earlier placed in the pump to harvest card info.

He put those in there, and for whatever reason, they're not there anymore. I know why, because I have them.

Sean Marquez took out the skimmers and installed a night vision spy camera instead.

We may have the first-ever video of organized bad guys actually trying to retrieve their skimmers.

Credit card fraud is now a $16 billion a year problem in the US alone. Skimmers every day, every hour, stealing your digits.

They can use those 16 digits over the phone to place a phone order. They can use them online to plug it into a website, or they can actually clone a card. They can burn the information onto a blank ATM or credit card and use that out in the wild.

Still not afraid? Listen to this reformed credit card thief.

It's very easy and it's a lot of money. So anything I wanted, I would just go out and get for free using these cards.

Dan DeFilippi is poacher turned gamekeeper.

Somebody, uh, turned my partner in and he turned me in.

Then DeFilippi started working for the Secret Service, teaching agents how to stop skimmers helping themselves to the data. On our magnetic strips.

When the magnetic stripe was created, identity theft wasn't an issue, and so the data was never properly encrypted. Once criminals figured it out, obviously it has become a huge issue.

Now this is the latest weapon in the fight against credit card crime.

This right here is the recently issued standard chip and signature card. It is supposed to eliminate the cloning of your credit cards because the chip holds your data encrypted.

You may have recently received one in the mail from your bank. It's the panacea. It's going to solve the whole problem. No, it's not.

Skimming is still alive and well, and it will continue to be alive and well as long as that magnetic stripe is still on the back of our cards.

I'll have that cheesy tomatoey one and water. Still there because it's taking a long time and a lot of money. You don't do chip. No, it's just a swipe. Just a swipe. To make the switch. So most cards now have a chip with all my details on it.

It's not actually encrypted, 'cause they could easily have what's called a wedge-type device, a small skimming device. They could grab all the information off of it, and they could actually create a whole 'nother credit card. So watch them closely.

Watch this McDonald's drive-through clerk in Florida swipes once through the skimmer, once through the register, so fast you've no idea. Cops say he was stealing digits from up to 70 cards. Cards every shift.

And they actually were able to catch the individual sliding the card and then grabbing the receipt and hand it to me all in one nice movement. You'd never know that he was doing anything wrong. He seemed to always be smiling. He was getting more than minimum wage.

The clerk pled guilty, got 2 years probation. Or there's this. I'm about to steal this coffee drinker's credit card details with an app on my phone surreptitiously placed on her wallet for just a few seconds. So to stop that happening to you, you can buy what's called a shielded wallet like this. A wallet that blocks scanning devices. There's also the Signal Vault, as seen on ABC's Shark Tank.

And our e-fill technology makes your information invisible to hackers.

Looks like a credit card has the same blocking powers as the shielded wallet. Or the cheaper option, you can cover all of your credit cards in aluminum foil. Coolin' the gang. And with that magnetic strip still in place, the ATM also a potential danger.

Be aware that at any given point in time, there could be a skimming device on the face of that ATM.

This might sound stupid, but check that there's nothing jiggling around that looks like it's been attached onto the front of the ATM. São Paulo, Brazil. Looks like a normal ATM? Think again. Watch this cop pull off the false front that'll harvest your credit card details when you think you're just withdrawing a little walking around money.

Also, make sure that you cover up the actual keypad with your other hand as you punch in your PIN code, 'cause there could be a camera anywhere recording your PIN number.

Robert Siciliano has an ATM in his garage.

When criminals set up a skim scam, there's generally two parts to the scam. One would be a small wireless camera here, hidden behind this mirror. This takes video footage of the keypad as you're punching in your PIN code. In addition to the camera, of course, is the skimming device. The skimming device fits on the face of the ATM, so when you swipe your card through, it grabs the information off of the back of the magnetic strip. Even if a consumer has a chip card, it doesn't make a difference because all ATMs here in the US still use the magnetic stripe.

Now, as chips on cards catch on, thieves will move increasingly to so-called card-not-present transactions where the chip means nothing, like online shopping. Sweet, Proflex clothes dryer transition duct 1098. Just tap in the digits.

Nick, stop what you're doing. Whenever you use free public Wi-Fi, always know that somebody within 500 feet can always sniff your data. The problem with free Wi-Fi is that it's unencrypted and unprotected. Make sure you have what's called a VPN, a virtual private network, that encrypts and locks down your information on free Wi-Fi.

And 3 top tips in that same vein: don't use 123456 as your password on accounts. Get complex.

It helps.

And making sure you have strong and long passwords and have a different password for every account and also consider a password manager.

And check your statements. It's the only way you'll know you've been skimmed.

Some studies show that as many as 9 out of 10 consumers don't actually pay attention to their credit card statements.

Even sign up for alerts that ping you every time your card is used. Banks and businesses are now spending billions to change to the chip, but will they be able to stay one step ahead? Of the skimmers?

Researchers in a controlled environment have been able to get information off of chip cards, whereas out in the wild, criminal hackers haven't actually been able to crack the code, as far as we know.

As far as we know. Are you reassured by that? Oh, and Miami Beach detectives say that these men— yep, slipping that skimmer over the gas station card reader— detectives say they are still at large. I'm Nick Watt for Nightline in Los Angeles.