Beware of electronic identity theft

(WPRI) - Eyewitness News has learned more than 100-million new credit cards, known as "smart cards" may be at risk.

They contain tiny two-way radios called RFID chips. It's supposed to make shopping easier, by eliminating the need to fumble for cash. You just wave the card in front of scanners at checkout. But this convenience comes with a price.

Cheap gadgets available online for under $100 can mean a big payoff if you're a crook.

"You might as well have your credit card number stamped across your t-shirt because it's that easy for a bad guy to read," says Walt Augustinowicz, the owner of Identity Stronghold .

He makes protective envelopes used to protect smart cards from i-d thieves. He says he's been able to intercept card numbers from people all over the country, with their permission!

• Interactive: How to avoid identity theft

We asked him to demonstrate it for us. Armed with a credit card reader he bought off the internet, the same reader many retailers use, Augustinowicz exposes a potential problem. In less than one hour at the Warwick Mall, Walt found one person after another with one of these new credit cards.

All he had to do was get close enough, wave the reader hidden in a leather folder, and in a split second their entire credit card number and expiration date was exposed! Augustinowicz immediately deleted the information, but a thief certainly wouldn't!

"It's too easy, technology to help thieves these days, it really is," says Rhode Island State Police Lieutenant Nick Tella.

Eyewitness News contacted the Rhode Island State Police to see if they had seen and local cases of electronic pickpocketing. Although none have been filed yet, they agree it's entirely possible. So much so, it's now part of their investigation into credit card fraud.

"A lot of times these sophisticated rings have multiple card readers, they have printers, they have ways of emailing it to other people, putting it on magnetic strips," says Lt. Tella.

Eyewitness News contacted MasterCard, Visa and American Express. They all tell us electronic picketing fraud is rare, and if a customer's card is intercepted this way, they would not be held liable for any fraudulent charges.

MasterCard also says "...it is extremely difficult to copy an RFID chip and create a functioning counterfeit version of that card."

But Augustinowicz says it isn't that difficult and he was able to do it. "We've also taken the information, the same way it comes out of here and put it on a mag stripe of a hotel key another credit card and walked into stores and made purchases!"

If your credit card has an RFID chip it may have a symbol like this one on the back. To protect yourself from electronic pickpocketing, you can line your wallet with aluminum foil, or buy a protective sleeve to block someone from secretly reading your card.