ATM Skimmers on the Rise

Inside Subprime: Sept 21 2018

By Holly Kane

Next time you go to withdraw money from the dark corner where the cash-only neighborhood bar stashes its ATM, make sure nothing’s jiggling.

Loose parts or otherwise suspicious looking mechanisms could be a sign of an ATM skimmer, a device that collects and stores card information to be used in cloning debit cards. A Chicago customer found an ATM skimmer on a Wicker Park bank vestibule door, leading to TV news coverage and community alerts from Chicago police after the fraudulent device simply dropped from the machine. But what exactly is an ATM skimmer, and how do you avoid them?

They’re actually pretty simple: skimmers are placed on or around an ATM, and, usually in conjunction with a PIN-recording camera, capture information when unsuspecting consumers swipe their cards. The evolution of skimmers throughout the 2000s and 2010s shows that what started out as mostly urban legend proved to be an entirely real concern as skimming devices were discovered at gas pumps and even retail self-checkout registers. Furthermore, any physical protections put in place to deter the use of skimmers, like a card-slot cover, can only go so far when scammers have access to a 3-D printer that can make customized models that blend seamlessly into the design of the existing machine.

Though the hardware seems rudimentary, skimming is effective. Data analytics company FICO reported a 70 percent increase from the previous year in compromised debit cards in 2016, while compromised ATMs and merchant devices rose 30 percent. Sixty percent of these compromises occurred at non-bank ATMs or retail point-of-sale devices – think the ATM at the corner store or, as mentioned above, self-checkout registers, machines that aren’t attended to or closely monitored. According to the National ATM Council, of the roughly 470,000 ATMs in the U.S., about 60 percent of those are maintained by non-bank providers and merchants.

Just six months after releasing the study, FICO released another study showing the number of compromised cards was up 39 percent compared to the same period in 2016, meaning the primitive persists – and keeps growing.

In late 2017, three suburban Chicago men were accused of stealing $25,000 using a skimming device, around the same time Chicago released a community alert in October 2017 after finding skimming devices on more than a dozen ATMs around the city (including highly trafficked areas in the Loop near a concentration of traditional banks and payday loan providers.)

Enter the chip card. Banks started rolling these out in part to cut down on the kind of fraud that involves making fake cards (ie, the sole purpose of skimmers). Chip-card transactions require a one-time-use code to be successful, so cloning them is difficult. But not impossible. Scammers have used “shimmers,” a card-sized, paper-thin device outfitted with a microchip and flash storage, to duplicate card’s mag stripe, although a card replicated in this way will only work if used where proper security protocols are not followed.

But the more traditional skimmers, like the one found in Wicker Park and those found in 2017, are still used. According to financial technology company Diebold Nixdorf, which sells ATMS and similar products, “magnetic stripe skimming remains – by far – the most prevalent form of fraud at both ATMs and POS systems.”

To avoid skimmers and ATM fraud, the Better Business Bureau has a few suggestions that are as rudimentary as the technique itself.

“Jiggle on the scanner around the card slot,” the BBB said on its website. “Scammers might not be able to fully install one of these devices, for fear of being caught by employees or cameras, so these scanners could be loosely mounted.” The BBB also suggests using credit cards instead of debit cards, as charges are easier to refute, and monitoring card purchases and activity.

Luckily, most banks have your back. Thanks to the Electronic Fund Transfer Act, a consumer’s liability is limited to $50 if fraud is reported within two business days, and there is no liability if reported before purchases are made, according to the Federal Trade Commission.

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