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Skimming, Scanning, and Scamming:
ATM Crime On The Rise

by George Milner, with Sam Ott, Michele Petry and Mary Beth Guard

You're not the only ones heavily involved in customer identification. There are crooks out there that are increasingly turning to a tried-and-true ATM scam to steal the accounts and identities of your customers. And your accountholders don't even realize they've been scammed.

Skimming Defined
A small, inexpensive device is inserted into an ATM, ready to swipe the information from an unsuspecting customer. In addition, a camera is mounted to capture the keystrokes used to enter the password. With this information, the thieves can easily create a duplicate card and get into the account.

Just this week, three people were arrested in Chicago after creating 34 duplicate ATM cards. Recent reports have also come in from other Midwestern states, Florida, Kansas, and as far away as Australia.

And it's not as though the risk ends with the withdrawal of a few dollars. Many institutions allow a customer to print monthly statements right at the ATM. Armed with this new information, the crook is in a good position to gain full access to the account. What is being done to eliminate this threat?

From a technology standpoint, new machines are being built with the reader embedded deep within the machine. And the slots on the machine are being designed to make it difficult to attach a skimmer.

Also, a new technology called 'jitter' forces the card to move back and forth, and at different speeds, while it is reading the information. That foils many skimmers, which require a smooth card reader.

These improvements will help, but with the number of older machines in use, the thieves will have an easy time finding susceptible targets for years to come.

What can you do?
  • Make sure that your machines include anti-fraud features to help prevent skimming.
  • Develop alliances with your vendors and other institutions to share information about this type of risk.
  • Encourage your customers to report any non-working ATM, or any machine that appears to be acting strangely. Post a sign that is not easily altered or removed that asks users to be alert to any suspicious devices or activity - and report them.
  • Physically inspect your ATMs on a regular basis. If you have ATMs that are in close proximity to particular employees' homes, consider allowing them to leave a few minutes early each day so they can stop by the ATM for a quick look-over, or set up some other method for ensuring routine inspections.
  • Examine your ATM activity logs. You should have historical data about usage patterns. If you notice that a pattern of activity recently deviated from the norm, check it out. For example, if your ATM at the mall usually has a steady stream of activity during mall business hours and you notice that no transactions were conducted for a period of several hours, that may indicate a skimming device was present on the machine during those hours.
  • Scrutinize all reports of unauthorized account activity to look for commonalities. If three customers claim they never lost possession of their card, yet they all had unauthorized withdrawals made from their account, examine their past transaction records. Have they, in the recent past, all used the same ATM? It's possible they may have returned to the ATM for a new transaction recently and had their card skimmed. Quiz the customer about the location of any unsuccessful ATM usage attempts.
  • Notify the Secret Service immediately if a skimmer is discovered. Treat the area as a crime scene. Preserve any security camera footage.
  • Educate your customers.
The last item on the list is critical. Without help from your customers, the task of protecting their accounts becomes much more difficult. We've provided a list of tips that you can share with your customers to help reduce the chance of skimming and other forms of ATM crime.

What can tell your customers to do?
  • Always protect your PIN.
    • Don't write the number down
    • Cover the keypad while you enter the number
    • Don't give the number out to anyone
  • Know where the security cameras are located. While many ATM have cameras, they won't be positioned to record the keypad.
  • Be wary to any offers of 'help' with your ATM transaction.
  • Be suspicious of a machine that has signage indicating you should use a specific machine.
  • Use a different machine if you feel uncomfortable about the ATM instructions
  • Report anything that seems suspicious or strange about the ATM machine to your financial institution.
  • Alert us immediately to any suspicious activity around an ATM. This could include anyone who offers to help you, tries to look over your shoulder, or is taking pictures in the area.
  • Call us right away if your card is held by the machine.
  • Be on the lookout for fraudulent withdrawals on your monthly statement.
  • Conduct ATM transactions during the day - most ATM crime occurs in the evening
With diligence, financial institutions can fight back against this crime. You'll save your institution some dollars, and, just as important, you'll save yourself Reg E investigation/error resolution hassles and generate some goodwill with your customers.

Related News Stories:
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New York City
Skimming the cash out of your account

Copyright, 2003, BankersOnline. All rights reserved. First published on BankersOnline 05/16/03.

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