A case study in credit card fraud

Imagine that you're watching the news. You find out that your favorite restaurant, one that you and your friends visit regularly, has been the target of massive credit card theft.

What exactly runs through your mind? And what do you do?

In Austin, Texas, a local Greek restaurant chain was the target of large-scale theft of credit card numbers.

Souvlaki with a side of fraud

Problems involving the Tinos Greek Cafe chain began to surface in the summer of 2010, when credit card users reported seeing mysterious charges on their statements. With some investigating, it became clear that the common element was the local restaurant chain. A risk manager for a local credit union noticed that the restaurant was on the billing statements of several members who had reported false charges, and he contacted police.

But this wasn't the work of a nimble-fingered restaurant employee. It was an outside job, a security hack of the electronic connection between Tinos and its credit card clearinghouse in New Jersey.

USA Today reported on a similar security breach that affected the same credit card clearinghouse--Heartland Payment Systems--in 2009, and the Nation's Restaurant News reported on large-scale data theft of Dave & Buster's and Boston Market restaurants, perpetrated by the same "mastermind."

Cases like these are not uncommon, and the credit card theft isn't as simple as someone lifting your wallet out of your bag at the gym. These large-scale, often-international, hacking incidents can have thousands of victims.

So, how do you protect yourself? And what happens if you suspect you've been victimized?

Protecting your back-lava

Before you panic, keep in mind that you are more than likely to already have protections in place for your card. Generally, you are liable only for the first $50 in fraudulent charges, so your savings account won't be cleaned out. Call your credit card company immediately to report the suspicious activity. Doing so may help prevent others from being victimized in the event that it is a wide-scale theft.

Keeping a watchful eye on your card's activity is the best way to ensure you're not being victimized, and the fastest way to discover if you are. Your banking statements and spending histories become the greatest ally you have to avoid incidents like this.

But there are more incidents than international crime ring thefts. Accidents happen, too: A vendor may double-charge you by mistake, or you may get the wrong card returned to you at a restaurant. Being aware and looking out for these mishaps are key ways to be a responsible credit card user.

It also doesn't make sense to penalize the business. While knee-jerk reactions are understandable, it is probably better to give the restaurant your business after the theft has been discovered. You're better off patronizing a place after problems have been discovered rather than before. At least you know the problems are being taken care of.

It might also be worth noting that the Federal Trade Commission (FTC) will step in if a company appears not to have done enough to protect customer data. In 2010, the Dave & Buster's chain settled charges from the FTC. As a result, the company had to develop and maintain a program to protect the "security, confidentiality and integrity" of customers' personal data and submit to independent audits every other year for 10 years.

Be a gyro: protect your credit card information

Hacking is a real threat to the security of credit card information, but there are many protections in place if your card is exploited. The FTC, local police, bank staff, and others can get involved when a problem is suspected.

Ultimately, though, the best protector of your credit card data is you. Acting immediately if you see something odd on your card not only ensures that you're protected, but, in some cases, it can stop criminals in their tracks ... and make it safe to go back to your favorite restaurant.

The common thread among all reported credit card theft incidents: The theft was discovered when cardholders reported suspicious charges showing up on their credit card statements.

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