'It's gotten out of hand': Toronto area taxi fare scam has defrauded victims of millions, police say

January 17, 2019

Toronto police issued a warning on Thursday about an ongoing taxi fare scam that has already led to the arrests of five people who now face more than 260 charges for identity theft.

According to investigators, some taxi drivers are using customized point-of-sale machines — often called debit machines — to steal key financial information from customers. Police stressed that cab companies are "not directly involved" in the alleged scam and have co-operated with the investigation. 

The fraud has been going across the Greater Toronto Area for at least a year, said Det.-Const. Kristin Thomas. Hundreds of victims have had money and information stolen.

"It's gotten out of hand," Thomas said, adding that one Canadian bank has reported more than $1 million in losses, while several others say their customers have been defrauded of hundreds of thousands of dollars. 

The alleged racket is fairly straightforward. It relies partly on technology, partly on sleight of hand. 

According to police, a driver picks up a customer and takes them to their destination. If the customer opts to pay with a credit or debit card, the driver hands them an altered point-of-sale machine. The customer inputs their pin code into the machine, which then returns an error message. The driver asks for the device and the payment card "to rectify the problem," police said.

At that point, the driver swaps out the customer's card with another card from the same financial institution, and completes the transaction. Those involved make a point of operating late at night and into the early morning hours, when customers are likely to be less alert, Thomas said.

Here's the crux: the point-of-sale machine records the customer's pin code. 

The driver then heads to a bank with the customer's actual debit or credit card and their pin, and drains their account from an ATM. 

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