Criminal gangs have found a new way to steal people’s payment card details and raid their bank accounts by tampering with the chip-and-pin machines in shops.

Police warned that fraudsters have been hiding devices inside checkout card machines to access the details of any card that is used.

The criminals then clone new cards and withdraw money abroad where the chip-and-pin system is not yet in use.

The new ‘card-skimming’ scam came to light after police raided an alleged card fraud factory in Birmingham on Monday.

Officers said 30 checkouts in the UK had been affected by the new type of fraud, with petrol stations most likely to be targeted by fraudsters.

During the Edgbaston raid, stolen chip and pin terminals, card account numbers, card readers, computer software and counterfeit magnetic strip cards were recovered.

It is thought thieves steal the card readers from shops or manufacturers and install a hidden device which logs information when a customer enters their pin number.

The reader is then put back in a shop, supermarket or petrol station, sometimes with the collusion of a member of staff.

Fraudsters use the information to create fake cards to withdraw cash in countries where chip-and-pin has yet to be introduced.

Chip-and-pin technology has been hailed as a success in reducing card fraud in the UK since its introduction in 2006.

Apacs, the UK Payments Association, said that over the past three years losses on high street transactions fell from £218.8m in 2004 to £73m last year.

But card fraud abroad has increased by 77 per cent in the past year, and costs £207.6 million, according to the specialist police force for card fraud in the UK, the Dedicated Chip and Plastic Crime Unit (DCPCU). Banks throughout Europe have agreed to bring in chip-and-pin cards by 2010.

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