The Guardian: Middle England’s identity crisis: £1m siphoned out of customers’ accounts at Shell sites

Cash transactions have taken off in Letchworth. Photograph: David Sillitoe

Miles Brignall takes to the high street in leafy Letchworth to see how people are coping with an explosion of bank card fraud. The answer? Ditch cards and go for cash
 
Miles Brignall,
Saturday December 15 2007 

It’s a middle England commuter town where the chief topic of conversation is usually the weather or train delays. But now the Hertfordshire town of Letchworth is coping with an explosion of identity theft, the victim of gangs of fraudsters who target one community, siphon as much money as possible out of bank accounts then move, locust-like, to neighbouring areas.

The impact on individuals who have seen their bank accounts cleaned out is devastating. And now evidence is emerging of how whole communities are losing faith in bank cards and chip-and-pin technology – and are turning back to cash-only transactions.

When Guardian Money spoke to consumers on the streets of Letchworth, we found large numbers of people boycotting outdoor cash machines, and, in some cases, abandoning the use of bank cards in stores.

Shoppers at the Shell petrol station told us they will never use their bank cards to pay for fuel again, after witnessing the chaos caused to friends who have had bank accounts plundered by fraudsters. Outdoor ATMs are strangely quiet, while inside banks there are queues of customers taking out cash.

Letchworth has a population of 33,000, but virtually everyone we spoke to in the town centre this week said they had either been the victim of bank card fraud – or they knew of someone who has had money illegally taken from their bank account. Usually the illegal withdrawals take place in Australia.

Several residents said they no longer trusted the security measures to protect their money and were now only using cash. Almost all said they would no longer use cash machines unless they were inside the bank.

It’s hardly surprising. In November, the town that, until now, has been best known as the first garden city, suffered a sustained attack from card cloning gangs.

Card-reading equipment at the Shell garage, on the main road in and out of the town, was compromised. A cash machine – believed to be at the local branch of Barclays – also had a skimming device fitted.

The local paper was filled with tales of woe. They resumed with a vengeance this week, when it emerged the problem had spread to another Shell garage in nearby Hitchin.

Hilary Gibson defaulted on her mortgage because thieves stole the £700 she had deposited to cover the payment the following day. Leisa Virgo from Hitchin was another victim. When the bank called to check a payment, she immediately cancelled the card – but not before £300 had been withdrawn.

Just weeks after the original attack, when residents thought things were returning to normal, Hertfordshire police reported that CCTV monitoring had foiled another attempt to install a skimming device at another cash machine. Four people were arrested.

“To be honest, I have stopped using bank cards,” says Peter Merrigan who has lived in the town with his wife for more than 40 years. “I now prefer to go into the bank and get out my money the old-fashioned way – I certainly wouldn’t use a cash machine.” His wife Pamela does have a card, but took the same view.

Derek and Yvonne Black were the next to pass. Mr Black says he has abandoned bank cards and carries enough cash to buy everything he needs. “Bank cards aren’t worth the hassle,” adds Yvonne. “Our neighbour spent £40 at our local DIY store – the next thing she is phoned by her bank asking whether she had bought goods at stores all over London. It took ages to get it sorted out.” While a few brave souls were taking money out from outside cashpoints, almost everyone we approached in the town said they no longer trusted cash machines unless they were inside a branch.

“I will use the outdoor ones but only in an emergency now,” said one woman who rushed off after spotting a parking warden bearing down on her car.

A bank teller inside Nationwide advised us not to use an ATM in the town unless it was linked to a branch because “they just aren’t checked as often.”

Simon Harvey, who lives in the town but works at a university in Norway, has had both his Barclaycard and his First Direct debit card cloned by thieves in recent weeks.

“I had suspected it was something to do with the Shell petrol station but hadn’t had any proof,” he says. “The whole thing has been hugely inconvenient. The bank has been very good – Barclaycard less so.”

He adds: “It’s funny, my parents have long said that an over-reliance on bank cards was fraught with danger but, until now, I haven’t worried. Having become a victim, I’m starting to think that maybe they have a point.”

One woman, who declined to give her name, said: “The banks are going to have to sort this problem out. I’m fed up with queuing to get out my money, but after what happened, I’m not prepared to risk the cashpoint out in the street. It may sound mad, but I know so many people who’ve lost money.”

When we looked at the ATM outside the Barclays branch, it had wires hanging out and had clearly been attacked. “Don’t worry, it still works fine,” we were told by staff in the branch.

A spokeswoman for the banking payments body, Apacs, says bank card losses abroad leapt 126% in the first half of this year, when compared to the same period in 2006. Over £220m will be stolen from UK cards outside the UK in 2007 alone.

“Sadly, the recent events in Letchworth are not uncommon, and no worse than many other similar attacks that have occurred in towns across the UK,” she says.

“However, it’s worth noting that everyone affected will be reimbursed by the bank. The chances of having your bank cards skimmed are still very rare – it is much safer than carrying around large amounts of cash.”

Geoff Camp, chief inspector for North Hertfordshire police, says: “Our belief is that the fraud took place over a relatively short period, some time ago.

“While some significant progress has been made, no one has been arrested. This type of investigation is extremely complex, not least because of the technical equipment being used and the international aspect of this type of crime.”

Skimming right across the UK

Letchworth isn’t the first town to be targeted by card fraudsters – from Aylesbury to York most towns of any size in the UK have been attacked at some point in recent years.

In Bicester, near Oxford, fraudsters tried to attach a skimming device to every cash machine in the town. More recently, the problem has switched to garage forecourts.

Card skimming usually takes one of two forms. Fraudsters attacking cash machines will fit a false front which incorporates a card reader and a tiny camera to record the customer’s pin as they tap it in. They sit some way away and record the details on a laptop.

The other major method involves a corrupt store employee skimming the card with his or her own reader. Again a camera is used to record the pin – in some cases the store’s own CCTV system has been used to record the number as the customer types it in.

Armed with this information it is relatively easy to clone a victim’s card – this usually happens outside the European Union, where cash machines have not been upgraded to use the latest chip-and-pin technology.

Most of the Letchworth victims had money taken from their accounts in Australia. The fraudsters will take as much money as they can before the bank stops the card, or they have cleared out the account.

According to Apacs, skimming gangs, mostly from eastern Europe, tend to target an area, milk it, and quickly move on before they get caught. As the banks have stepped up checks on cash machines, gangs have increasingly targeted staff who work in retail outlets.

In May last year, the petrol giant Shell was forced to suspend chip-and-pin payments in 600 UK petrol stations after more than £1m was siphoned out of customers’ accounts.

A group linked to the Tamil Tigers in Sri Lanka is rumoured to have threatened staff into allowing recording devices to be installed in garages across the UK.

Last week it emerged that more than 100 residents of the tiny Leicestershire village Houghton on the Hill, had been the victims of card cloning – again, a garage in the area has been implicated.

http://www.guardian.co.uk/money/2007/dec/15/scamsandfraud