Is your waiter a thief?

The news last week that waiters in some of New York's top restaurants were involved in a highly organized credit card scam on customers is enough to make anyone swear off paying with plastic -- or eating out altogether.

Over the past year and a half, about 50 diners at restaurants such as the Capital Grille, JoJo, Smith & Wollensky and Wolfgang’s Steakhouse had their credit card information stolen and used to purchase big-ticket items that were then sold for cash, according to The New York Times.

On Friday, 28 people were indicted in the identity-theft ring. Reports on the scope of the crime range from $600,000 to millions of dollars.

In the scam, which focused on customers with high-limit American Express cards, seven waiters at various Manhattan restaurants used small skimming devices to copy data, then turned it over to high-tech criminal organizers, who created counterfeit cards. Next, the ring's "shoppers" were sent out with fake driver licenses and instructions to behave like big spenders -- while they racked up as much as $35,000 on each card before ditching it, The Washington Post reported. Many of the illegally purchased goods were then sold for cash.

Because the waiters targeted only high- or no-limit cards, the customers were most likely accustomed to high credit card bills and would not have noticed suspicious account activity unless they were alerted by their card companies, Cyrus R. Vance Jr., the Manhattan district attorney, told The New York Times.

Don't let it happen to you

Outside of making sure your AmEx card doesn't have an exorbitant spending limit, how can you make sure you won't be the victim of a similar scam?

The skimming devices used by waiters in the Manhattan scam were about the size of a tube of lipstick -- 3 inches long and a half-inch wide, and could be easily concealed in the palm of a waiter's hand, according to The Washington Post.

Portable magnetic card readers are readily available on the Internet, for prices ranging from $240 to about $350, through sites such as eBay, Tyner and Hackers Homepage.

One safety measure is for restaurants to use portable credit card-swiping machines, Jonathan Mintz, Consumer Affairs Commissioner told the newspaper. This would allow diners to swipe their own cards, at their tables, instead of allowing a waiter to take the card away for a few minutes.

Some advice on how to protect yourself against credit card fraud, from the Federal Trade Commission:

• Keep an eye on your card during any transaction, and get it back as quickly as possible.
• Save your receipts to compare with your bill.
• Open bills promptly and reconcile your credit card accounts monthly.
• Report questionable charges promptly -- in writing -- to the card issuer.

Other things you can do, according to Bankrate.com:

• Don't wait for your credit card statements to come in the mail; regularly monitor your accounts online.
• If your financial institution offers them, set up mobile alerts for your phone so you can be aware of unusual activity as quickly as possible.

In any case, it's much better to use a credit card in restaurants than to use your debit card. While you won't be held responsible for debit-card transactions if you report the card as stolen before it is used, you could lose everything if you don't notice it's gone before the thief cleans out your account, SmartMoney warns.

Credit cards issuers, on the other hand, usually protect you against fraudulent charges if your card is stolen.

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