Dining Out and Identity Theft: Restaurant Credit Card Scams

Eating out can be a great experience. You can bond with friends and family over a table overflowing with delectable dishes. Best of all, you get to have a wonderful meal without the hassle of having to clean up afterwards. Unfortunately, eating at a restaurant can also become a gateway to credit card fraud.

In late 2011, 28 people were indicted in an identity theft case that victimized customers of some of New York’s top steak houses. The thieves were waiters who used small skimming devices or scanners to copy customers’ credit card data. They then turned the data over to their bosses, who in turn created fake credit cards.

People were then sent out to rack up big charges on the credit cards, sometimes as much as $35,000 on each card. The restaurant credit card scams the crime ring perpetrated cost their victims in the range of $600,000 to millions of dollars.

credit card scannerCases like this aren’t isolated incidents. Hackers have apparently long been targeting restaurants and similar businesses for harvesting customer identities. In 2011, data security firm Trustwave’s SpiderLabs unit conducted an investigation into a number of data breaches. The firm found that more than 85 percent of the breaches they analyzed came from the food and beverage, retail, and hospitality industries.

SpiderLabs also found that in 75 percent of the cases they reviewed, hackers targeted point-of-sale or POS systems. Those little card scanners with the keypad where you type in your PIN? Those are part of a restaurant or retail shop’s POS system. Once they’ve gained access to the POS system, the hackers are then free to do what they want with the data stored on it. This, of course, includes confidential customer credit card information.

Credit fraud in restaurant franchises such as Subway has an even higher chance of happening. Franchises most often use a single POS system, so once the system in one store gets compromised it becomes easier to replicate the attack in other locations.

Customers have no control over whether or not a business will fall victim to a data breach. The protection of such sensitive data in the restaurant falls on the business’ shoulders. The good news is that there are a multitude of data security software and services available to these establishments. The bad news? Most businesses have weak data security. The SpiderLabs report found that hackers spent an average of 173.5 days inside a system before they were detected. That’s almost half a year; more than enough time to compromise a vast amount of customer data.

A system-wide data breach may be out of your control, but there are still some steps you can take to minimize the chances of your credit card information falling into the wrong hands. Here are a few key tips to prevent credit card fraud in a restaurant.

  • Never let your credit card out of your sight. When the time to pay for the bill comes, ask your waiter if the restaurant has a portable credit card scanner. This way, your credit card stays with you while your bill is rung up. Make sure that the scanner they are using is the one provided by the store, as well. An unscrupulous individual can carry their own handheld scanner to read the info on your card’s magnetic stripe. If they don’t, ask to accompany the waiter to wherever the scanner is located.
  • Don’t leave your receipts behind. Some restaurants’ POS systems don’t mask your credit card’s number and expiration dates on their receipts. If your receipt doesn’t have masked numbers, it can become a huge security risk if an identity thief gets hold of it.
  • Consider signing up for a credit monitoring service. It’s an after-the-fact alarm system, but it can still help you minimize the financial damage if your identity ever gets compromised.
  • Pay for your meal with cash. It’s simple, straightforward, and is the only foolproof way to make sure you aren’t left open to credit card frauds while dining out.

As is always the case with identity theft, the chances of it happening to you can be reduced through constant vigilance. Just always remember to keep an eye on your credit card and your receipts to keep your delightfully exquisite epicurean experiences from turning into identity theft-fueled nightmares.

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Joy M is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances. Follow her and know the best ways to prevent identity theft and how to monitor your credit against data breaches.

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22 Comments

  1. These are all good tips. My credit card number has been stolen a couple of times at a restaurant and my bank always reimburses me, but it’s a huge hassle.

  2. That’s crazy, especially considering the managers were in on it as well. It’s just another reminder that there’s always someone out there looking to take advantage of you behind your back.

  3. That sucks to hear that Michelle. Thankfully I’ve never had mine stolen but I can see how easy it is for these people to do this, especially when they have your credit card.

  4. I hear ya there John, it’s hard to trust people these days let alone just give them your credit card to pay for your meal, but millions of people do it every day. For me if my wife and I do go out to eat we always make it a point to pay in cash because it removes us from the entire problem in the first place, and doesn’t add to our debt.

  5. my card was cloned in a restaurant in Mexico and then they withdrew money from Colombia. Thankfully I was already back in Paris and could prove I withdrew money the same day from another country. scary what you can do even with a scan, you can buy anything from ebay, etc.

  6. This has been happening a lot. This just shows that if you can’t pay in cash, then don’t pay with a debit card because you can loose your shirt. You should pay with a credit card because they offer more protections. Not many people pay in cash anymore, so you just have to learn how to protect yourself.

  7. That’s a scary thought Pauline. I’m not really sure how international transactions would work with credit cards and security fraud but luckily you used the card in the same place you were at to prove the Columbia transactions were wrong. As far as eBay goes I’m sure it’s easy buy nearly anything on that site without proving the card was stolen.

  8. Very informative! As some who used to be a waiter years ago, I would never dream of stealing anyone’s information. Nor would you have the time! It’s all go-go-go when you are busy serving tables. But now I suppose these crimes are a lot more high-tech. You just really can’t trust anyone, can you …

  9. Good point Grayson, paying with a debit card is a bad idea because they don’t offer the protection that a credit card does if you can’t pay with cash. I made a big purchase on one of my credit cards a while back and shortly after that I got a call from my credit card company asking to verify the transaction which is kind of nice to know that when odd transactions are made on your card that someone is looking out for you.

  10. Good point MMD it’s not really hard to get a scanner these days. All you have to do is stop by your local Walmart store pick up a scanner, it’s that easy.

  11. Here’s one more thought, use a prepaid card if you have to use a card at all. Your liability is limited and if the card gets compromised, you can always go get another one!

  12. Good point Jose, that option would work as well as long as you didn’t have a huge amount of money on the card. If it’s $30 or $40 your damage is going to be pretty limited.

  13. Well that would certainly make a great meal not so great. I’ve heard this, but admit I haven’t paid much attention when paying in a restarurant, but I certainly will now.

  14. I agree Kim I never use to pay attention to just handing my credit card off to a waitress but after hearing of all the restaurant scams stories it’s made me be much more cautious about things.

  15. This is enlightening. I do tend to be careful with receipts, and where I charge, but I’ll be sure to be extra careful going forward. The scanning aspect is one that’s particularly important to be careful of.

  16. You’re so right. Whenever it’s a small store.restaurant/business where I’m not really familiar with the owners, I always, always pay in cash. Not worth risking it.

  17. Wow, Chris. You always make me aware of stuff I had no idea was going on. Good thing we don’t go out to eat often and I’m a stickler at making sure my cc bills and checking account match up to the penny. 🙂

  18. Good point DPF, unless I can watch the person scan my card in plain site I wouldn’t give them my credit card. It’s way to risky.

  19. I feel exactly the same way Troy, cash is always the safest option when paying at a restaurant.

  20. I’d have to say my family does about the same thing Laurie. We usually never go out to eat unless we have the cash in hand. It pretty much been the rule for us for the last year or two.

  21. I’ve never been hit by one of these but hear about its so often that I’m glad to see you wrote a post about it. There’s no such things as too many warnings!

  22. Your exactly right Jose, a lot of times people don’t take the warning signs serious enough and only when they get scammed do they react.

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