The scam involving a card-reading device slipped inside a grocery chain's self-checkout terminals has ballooned to include nearly 140 Petaluma residents among more than 500 victims across the Bay Area who filed fraud reports with police and Lucky Supermarket staff.
U.S. Secret Service agents with expertise in financial fraud are now taking the lead in the investigation into what appeared to be a widespread scheme involving the surreptitious installation of a device that transmits financial data over wireless networks.
Executives with Lucky corporate owner Save Mart Supermarkets now count 24 stores from Petaluma to San Jose where tampered card scanners resulted in the theft of debit card information and losses.
"The number of stores targeted here suggests some level of sophistication," said Andy Adelmann, special agent in charge of the service's electronic crimes task force in San Francisco and San Jose.
Agents were still analyzing the device as well as the time and tools it would take to install what company officials described as a computer memory board. Adelmann wouldn't discuss what they've learned so far. However, he did say they've investigated such wireless devices before.
Save Mart Supermarkets officials said the terminals were somehow opened, the devices placed inside the machine and connected to VeriFone card readers.
Similar devices have been used to capture financial information at gas stations and bank ATMs. Agents with the Northern California Computer Crimes task force are building a case against two men linked to Southern California Armenian gangs suspected of placing card-reading skimmers at banks across California, including at a JP Morgan Chase branch in Petaluma.
Bank staff in September 2010 discovered a facade over a card swipe device on the door of an ATM kiosk on South McDowell Boulevard, Chapman said.
"They had a camera that picked up the key pad, it was attached to the machine with an adhesive," Chapman said.
Two suspects are in custody in San Luis Obispo County.