Monday, January 18, 2010

ATM fraud, a.k.a. skimming, is on the rise

ATM fraud, a.k.a. skimming, is on the rise

Andrea Rock; Consumer Reports

It pays to be wary at the ATM these days. The convenience of getting cash from a machine appeals to crooks even more than it does to you. Skimming crimes—whereby thieves tamper with an ATM or card payment device to steal your PIN and the account data stored on your card’s magnetic stripe—are on the rise, according to financial security experts.

The trade publication BankInfoSecurity reports that ATM skimming is expected to be among the top forms of fraud that banking customers will face in the coming year. The publication noted that ATM fraud ranked among the top scams last year too. A wave of skimming crimes was reported in the last two months of the year in cities such as Nashville and Las Vegas.

At the same time, law enforcement officials in Maryland, Illinois and Georgia were investigating ATM skimming schemes that netted at least $120,000 from bank customers’ accounts. And over the holidays, BankInfoSecurity reports criminals hit ATMs to steal money from the accounts of bank customers in Florida and credit union members in North Carolina.

“Crooks prefer tampering with unattended machines, so you can reduce your risk by avoiding ATMs in public locations like airports, kiosks or convenience stores and sticking with machines that are monitored by video cameras in bank lobbies,” says Avivah Litan, a senior analyst at Gartner Research specializing in fraud detection and prevention. You can find more tips here from Consumer Reports Money Adviser on avoiding ATM and debit card fraud.

Litan points out that crooks also have been pulling off ATM card fraud by breaking into the computer systems of the banks themselves or third parties that process banking transactions. They then obtain PINs and other data needed to clone ATM cards.
That’s what a network of crooks did in early November 2009 when they hacked such data from third-party processor RBS WorldPay and then used cloned ATM cards to make about $9 million worth of withdrawals simultaneously from cash machines in cities worldwide.

While there’s not much you can do to prevent this type of fraud, you at least can limit the potential damage by checking your accounts online regularly to spot any unauthorized transactions and report them as quickly as possible.—Andrea Rock

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