The bank customer was getting suspicious while trying to withdraw cash from a drive-up bank ATM in New Port Richey, Fla., last year. The blinking LED lights around the card slot were flashing faster than usual, and the slot seemed oddly slow to take his card, he told sheriff’s department officers.

Then he reached out and jiggled the card slot. It came off right in his hand. He notified the bank, and police started their investigation.

They discovered that a fake card reader, or skimmer, had been placed over the real card-entry slot and that a pinhole camera had been recording customers entering their personal identification numbers. “We have the bank surveillance tape showing the suspect installing the skimming equipment,” Sgt. Jeffrey Peake of the Pasco County Sheriff’s Office says, but the suspect couldn’t be identified.

The customer avoided becoming a fraud victim, but other Americans have not been as lucky. In the U.S., 32 percent of consumers reported card fraud in the past five years, according to a 2010 survey released earlier this year by ACI Worldwide, which supplies payment systems to financial institutions, processors, and retailers. That was up from 27 percent in 2009.

That number is likely to grow because the credit and debit cards most Americans use are surprisingly vulnerable to fraud, relying on decades-old technology that makes them more susceptible to being skimmed and counterfeited.

Even some contactless credit cards, which use radio frequency identification (RFID) chips that allow you to make purchases without having to swipe your card through a card reader, are vulnerable to virtual skimming, Consumer Reports found in its investigation. We witnessed how they can transmit data such as your card’s account number, expiration date, and security data that thieves could intercept and use to make counterfeit cards. To read the rest of the article, click here.