Skimming works by replacing a card reader like an ATM with a camouflaged counterfeit card reader. The counterfeit reader records all of the data on a credit, debit or ATM card as it passes through the skimmer. In addition to ATMs, other locations where card skimming happens include restaurants, taxis or other businesses where an employee will take the card from the actual account holder in order to run the charge. In these instances, the thief has fitted the card reader with a skimmer, or uses a hand-held skimmer hidden in a pocket.

Also see "How to Protect Against Card Skimming" in the Did You Know...? section of Webopedia.

How to Protect Against Card Skimming
Card skimming, the practice of using an electronic device, known as a skimmer, to record account data encoded on the magnetic stripe on a credit, debit or ATM card, has grown to a $1 billion-plus annual business, according to published reports.

Identity Theft Experts - www.IdentityTheft.info
Includes identity theft articles, research and videos related to identity theft protection.

Webopedia's "Did You Know...?" Section
Use this Webopedia knowledge section for an in-depth overview of specific technologies and occurrences in the areas of Computer Science, The Internet, and Computer Hardware and Software.