This is an old trick that's been around since I was a waitress in college. I recall a wayward friend coming in to dine at the restaurant where I worked and asking me to record the card information for my customers in return for kickbacks - Umm, no! I was a student and a mother, so I had no plans of going to prison.
It's pretty easy to have a fake/mock-up embossed with stolen card information and when the fake swipe panel doesn't work when trying to make a purchase, the cashier will key in the card info and expiration date. The purchase will then go through.
Cards that are not embossed are better because an inconspicuous trick is to simply take a pencil and paper and quickly scribble over the card to get the details recorded. This can usually be accomplished in a few seconds and not raise a eyebrow on how much time has elapsed while standing at the micro or looking like you are copying details if someone is watching. I don't think how much time has elapsed when a server has your card is indicative of much of anything, especially if the restaurant is busy or a your party has handed the server multiple cards on which to split the bill. Stealing info can be done in a matter of seconds. Also, I can't think of any restaurant having a cashier besides IHOP or a diner.
Off-topic Sidebar: I witnessed an inordinate amount fraud and theft while waitressing. Non-English speaking busboys/girls would get ripped off the most in terms of managers and servers stealing their pay.
The thread would be more appropriately entitled "Debit card holders beware" 
+1 on always using a CC over a debit card. A debit card is like a thief's free ticket into my checking account. I only use my debit cards for ATM transactions and one of my credit unions requires me to use my debit card at least once a month to keep [excellent] checking interest rate. So I use that debit card for coffee or a vending machine. I keep my checking account balances low so even if a thief got my debit card, they won't be able to get very far. And I'm paranoid, so I check my bank and credit account activity at least once a day.
@sakhalin070 wrote:+1 on always using a CC over a debit card. A debit card is like a thief's free ticket into my checking account. I only use my debit cards for ATM transactions and one of my credit unions requires me to use my debit card at least once a month to keep [excellent] checking interest rate. So I use that debit card for coffee or a vending machine. I keep my checking account balances low so even if a thief got my debit card, they won't be able to get very far. And I'm paranoid, so I check my bank and credit account activity at least once a day.
just when i thought iwas the only one lol
This happens too often...sorty to hear about your situation...hope it works out to your favor