Two lawsuits have been filed against Michaels Stores Inc., which disclosed that its checkout-line PIN pads were tampered with in Illinois and 19 other states. The lawsuits seek class-action status on behalf of consumers, alleging that the arts and crafts retailer failed to safeguard shoppers’ credit and debit card information and PIN numbers. The latest lawsuit was filed in an Illinois federal court by Mary Allen. She said an $18.16 purchase at a Michaels store on March 15th led to more than $1,000 in unauthorized transactions. Her suit seeks class-action status for any U.S. resident who made at purchase at a Michaels store nationwide using a debit or credit card swiped through a PIN pad beginning Jan. 1, 2011.
Around March 15th, according to the lawsuit, Mary Allen used her Harris Bank debit card to buy $18.16 in goods from a Michaels Store in Vernon Hills. It was alleged that she swiped her debit card through one of the tampered Michaels PIN pads and “unwittingly had her debit card information and PIN number stolen as a result.” On May 4th, when she tried to withdraw money at her local bank, it was blocked. A bank employee told Ms. Allen the card had been de-activated because of suspicious activity. An account record showed two unauthorized transactions on or about May 4 for $503 each at two locations in California. Ms. Allen reported the theft to the police, but says she never received any alert from Michaels.
Michaels’ has 964 stores in the United States. Some Michaels’ customers reported fraudulent cash machine withdrawals, each totaling hundreds of dollars. The Allen lawsuit alleges:
Michaels’ lack of adequate security granted easy access to third parties who tampered with in-store PIN pads to … ‘skim’ unwitting customers’ debit and credit card information and subsequently steal money directly from the victims’ bank accounts. In essence, Michaels’ security failure enabled cyber-pickpockets to steal customer financial data from within the retailer’s stores and subsequently loot the customers’ bank accounts from remote automated teller machines.
Skimming is a term that may be known to our readers. If not, it involves the unauthorized capture of debit or credit card magnetic strip data. I am told that “Magnetic strip technology” can be duplicated easily. This allows a third party to assume a victim’s identity. As I understand it, skimmers are typically built with easily-obtainable electronic parts. A thief will use false card readers, combined with hidden wireless cameras or electronic membranes put over the PIN keypads, to capture a victim’s card information and the PIN numbers punched. The information is transmitted to the thief, who can then create a bogus duplicate card or sell the information. Apparently, creating a duplicate takes only seconds using a card-cloning machine that can be bought online. These bogus cards, with the stolen PINs, can be used to withdraw cash from the victim’s bank account at an ATM. This is a most serious matter and most folks don’t realize it. According to the Electronic Funds Transfer Association, theft from ATM skimming exceeds $1 billion annually.
According to the Allen lawsuit, the payment equipment might have been tampered with as early as February of this year. It said about 90 PIN pads showed signs of tampering. Violation of the Federal Stored Communications Act and the Illinois Consumer Fraud and Deceptive Practices Act were alleged, as well as negligence by Michaels. The firm of Lite DePalma Greenberg of Chicago and Faruqi & Faruqi of New York are representing the Plaintiffs.
Source: Chicago Tribune
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