DEFINITION of ‘Cloning’
The copying of stolen credit or debit card information to a new card. Cloning, also called skimming, requires the copying of card information at a card terminal using an electronic device or software, and then transferring the information from the stolen card’s magnetic strip onto a new card or to rewrite an existing card with the information. Cloning does not require the physical card to be stolen.
INVESTOPEDIA EXPLAINS ‘Cloning’
Credit cards and debit cards are a popular method of payment for a large proportion of transactions. Businesses provide card terminals at the point-of-sale to allow consumers to swipe their cards, with the terminals using a variety of encryption methods to protect the numbers from being stolen.
The cloning technique requires a card to be scanned using an electronic device. The scanning may be done by a store employee who handles the card during a transaction, with the employee surreptitiously scanning the information using a portable reader before then scanning the card in the credit card terminal. This allows the information in the magnetic strip, which is typically encrypted during the transaction process, to be recorded in the device memory.
Once the card information is recorded it can be transferred onto the magnetic strip of a new card, or may overwrite the data on an existing credit card that has already been stolen. For cards that use a PIN number in addition to a magnetic strip, thieves will have to observe the PIN being inputted.
In the United States, credit and debit cards use a magnetic strip that lets a terminal identify the account to charge. Relying solely on the magnetic strip card is a less secure method than requiring the use of a PIN-and-chip card, because a PIN makes it more difficult for stolen credit cards to be used.