Police uncover £1m chip-and-pin fraud

Shoppers have been warned to check their bank statements after a £1m chip-and-pin fraud was uncovered by police.

The warnings follow the discovery that hundreds of customers at Shell forecourts had their details stolen as they paid for petrol. Criminals posing as technicians are thought to have implanted devices into chip and pin machines which can copy a bank card's magnetic strip and record a person's pin number.

The device cannot copy the chip, which means any fake card can only be used in machines where chip and pin is not implemented - often abroad.

More than £1m has been siphoned off, an investigation by the Cheque and Plastic Crime Unit of the Metropolitan Police has found. Shell has suspended the chip-and-pin mechanism at 600 of its company-owned petrol stations across the UK. BP and other petrol companies are also looking into reports of card fraud.

Eight people have been arrested in connection with the scam, according to the Association of Payment Clearing Services (APACS). Sandra Quinn, for APACS, said: "They have used an old-style skimming device. They are skimming the card, copying the magnetic details - there is no new fraud here. They have managed to tamper with the pin pads. These pads are supposed to be tamper resistant, they are supposed to shut down, so that has obviously failed."

There are nearly 1,000 Shell outlets in the UK, 400 of which are run by external franchisers who will continue to use the chip-and-pin service. It is hoped the suspended chip and pin in the remaining 600 petrol stations will be restored later this week.

The incident has drawn attention to chip and pin, which was supposed to prevent this type of fraud because confidential card details are stored in a microchip, which is harder to copy and reproduce.

But to ease the introduction of the chip-and-pin system, cards still have the magnetic strip on them, from which the fraudsters have swiped the information. According to consumer groups, banks were reluctant to convert their cash machines to read only chips in case it affected relations with genuine customers.

A spokesman for Shell, said: "We will reintroduce chip and pin as soon as it is possible, following consultation with the terminal manufacturer, card companies and the relevant authorities."