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Facing up to fraud at the pump

US gas stations are a clear target for criminals, in part because their at-pump infrastructure is often no longer fit for purpose. So what should petroleum retailers be doing about it?

While families got together for parades, food and football, the Secret Service had other plans for Thanksgiving 2018. Agents were being deployed across the US for a massive crackdown.

The operation, dubbed Deep Impact, would be the fourth of its kind in 2018. Its aim? To curb fraud at gas stations by fighting skimming — a technique in which fraudsters use modified hardware to capture information in order to clone the credit and debit cards of unsuspecting consumers.

The rising toll of fraud at the pump

During 2018, 60 million cards were compromised in the US. And gas stations were high on the list of places where this was most likely to happen. A survey of 1,000 consumers held in August 2018 — just before Deep Impact — found that one in six suspected their card had been skimmed at the pump during the previous month.

More worryingly, some operators are gaining reputations for being especially high risk. 77% of skimming devices found in Arizona in 2018, for instance, led back to a single operator.

Becoming known for your vulnerability to skimming is hardly the best promotion. But, reputational harm aside, fraud at the pump also has other far-reaching implications for petroleum operators.

Industry analyst Matt Schulz argues fraud at the pump is common because the payments infrastructure is no longer fit for purpose. Many operators haven’t switched to EMV-enabled terminals. And for fraudsters, these are “the lowest-hanging fruit” when it comes to skimming.

With liability shift rules set to start applying to all gas stations from October 2020, operators will be under more financial pressure than ever before. Not only may they find more customers shunning them. They’ll also have to shoulder the cost of fraudulent payments if their infrastructure isn’t EMV-compliant.

Getting to grips with EMV

In March 2018, the Capra Consulting Group estimated that 90% of gas station operators would be EMV-ready by the end of 2018. The catch is that these figures only account for in-store payments.

Upgrading at-the-pump infrastructure has been more fraught. It’s expensive to do. And there are legacy issues to contend with, such as low-speed wiring and problems integrating EMV terminals into old-fashioned pumps.

Removing the at-pump payment option isn’t a viable solution as 72% of Americans prefer to pay at the pump. So, overcoming these challenges will be crucial. The growing incidence of skimming and upcoming liability shift could otherwise obliterate profit margins that are thin to start with.

At the same time, by 2021 two in every five cards will be contactless-enabled, and this will undoubtedly drive demand for alternative payments. This means it may be worth switching to terminals that are both EMV and NFC-enabled. Handling both switches in a single upgrade could keep costs in check, minimize disruption and, most importantly, help future-proof operators’ payments infrastructure.

Ramping up the fight against skimming

Upgrading to EMV-enabled — and, ideally NFC-enabled — payment terminals will undoubtedly take some of the pressure off gas station operators, especially once the liability shift kicks in.

But will it be enough to curb fraud at the pump once and for all? Probably not.

93% of the 60 million cards compromised in 2018 were chip-and-pin enabled. In part, this could be due to a lack of EMV-terminals forcing consumers to use their card’s magstripe. That said, fraudsters have adapted in the past and will no doubt continue to do so in future. Which means gas station operators should also develop protocols to keep their equipment safe, identify potential issues and deal with them swiftly.

The Payment Cards Industry Security Standards Council recommends the following best practices:

  • Putting security measures in place that make it as difficult as possible for payments equipment to be tampered with. This would include: 
  1. Keeping canopies well-lit and continuously monitored by security cameras
  2. Concealing wiring and securing it with tamper-proof labels
  3. Inspecting equipment daily for signs of tampering
  4. Regularly rotating staff, especially those who work nights


  • Training staff to recognize suspicious behavior and creating a culture that encourages them to come forward if fraudsters ask them to look the other way or get involved in the scam. And being aware of friendly fraud, so continuously monitoring staff as well as transactions.
  • Having an incident reporting procedure in place, including when and how to get the police involved.

In conclusion

It’s safe to say Operation Deep Impact was a success. On Black Friday alone, Secret Service agents recovered 200 skimming devices from gas stations in 16 states. That said, the growing incidence of fraud at the pump continues to be one of the most pressing challenges for gas station operators in 2019 and beyond.

When we interviewed 5,056 consumers for our Lost In Transaction: Payment Trends in 2018 report, 51% told us a certain level of risk of fraud is inevitable. But the vast majority also said they take steps to avoid it, including not shopping with merchants they perceive as risky.

While these findings relate to online shopping, consumers have similar attitudes offline, including when it comes to paying at the pump. This, coupled with the impending shift in the regulatory landscape, will hit those who don’t do their part where it hurts most — in their already narrow profit margins.

Clearly, it’s time for gas station operators to have their own Operation Deep Impact. Partnering with the right payment services provider that can help guide you through the EMV upgrade process, investing in their payments infrastructure and having measures in place to keep their equipment safe will help keep fraud in check and, so, avoid potential liability.

But, in the long run, a reputation for safety at the checkout can also become a significant competitive advantage. One that will help operators secure their customers’ loyalty and unlock new opportunities.

Want more insights on the future of gas stations in 2019 and beyond? Download our white paper US independent gas station retailers: Payments and the opportunities for growth in 2019