Colleges and universities have been using ID cards for a variety of uses, including financial transactions, since the early 1990s. Because the scam requires clerks to enter the card number manually, merchants are the first line of defense in catching the perpetrators.

These fraudulent cards usually look suspicious to begin with -- the numbers and letters often haphazardly glued on -- and that alone should raise red flags with store clerks and cashiers. However, many shaving scammers primarily use the cards in busy bargain stores where clerks are too harried to pay much attention and verification systems are so outdated that they don't require a matching ZIP code or other personal data. "If merchants physically inspect all cards, they'll minimize the incidents of counterfeit cards being used," says Tom Harkins, chief strategy officer at Secure Identity Systems.

It's in the merchant's best financial interest to keep a watchful eye. After all, any charges made with the number would likely be disputed by the card's rightful owner, leaving the merchant with little option but to absorb the loss through a chargeback.

That's why Siciliano recommends that merchants refuse service if the card doesn't scan. "Manually typing the card number in when there is even a hint of suspicion is risky," he says. As technology has evolved, however, so have card capabilities, leaving colleges with an ever-growing menu of options. (See related story, "3 must-ask questions about student ID cards.")

Some colleges are content with plain-vanilla uses; others have chosen to add a host of services, all of which students embrace. "You've got kids coming to campus who've been using cards and accounts since junior high," says Chris Corum, executive editor of CR80News.com, a publication that tracks ID card technologies relating to schools and institutional settings.