Bank Robbing 2.0

Financial institutions have plenty to worry about these days: robbers, hackers, fraudsters, scammers, viruses, malware, trojans —and the list goes on. One little talked about threat to FIs and their customers is ATM fraud in the form of skimming.

Skimming is the act of hijacking account information through the use of a card reader, usually installed on an ATM and fabricated to look like a part of the machine. Thieves have even utilized the readers used to unlock after-hours ATM kiosks. Often, a camera accompanies the card reader attached directly on ATMs and records customers entering their PIN.

Fraudsters can then withdraw money directly from the compromised account or sell the information to other criminals. Guns, drugs and other illicit materials can then be purchased with the stolen funds and card information, or criminals can perpetrate identity theft.

A recent post on the Krebs on Security blog, a banking and finance security blog, shows the latest in skimmer technology recovered from a compromised ATM. The unit is an all-in-one card reader with a built-in pinhole camera, seamlessly attached to an ATM — pretty sophisticated stuff.

One expert estimates more than $350,000 stolen from ATMs worldwide every day via skimming. With ATMs seemingly everywhere one could go – grocery stores, movie theaters, malls, gas stations – there is no shortage for opportunity. This reveals another part of the problem: unless you are a bank security expert, chances are remote that anyone from your FI has mentioned skimming or how to minimize the risk.

Here are some simple steps both FIs and their customers can use to lower the chance they will be victimized:

  1. Before inserting your card, always scrutinize the ATM for parts that look out of place, been added on or just plain don’t belong. Check for mismatched and uneven seams or other irregularities.
  2. Use your hand as a shield while you enter your PIN. This is perhaps the easiest preventative measure one can take. It will also prevent shoulder snoopers from spying on you.
  3. Educate yourself about skimming (and other forms of fraud). FIs can do a better job teaching their customers about skimming to help customers and members minimize the risk of being victimized. Hang a poster next to the ATMs or print warnings right on the machines, so it is fresh on the ATM user’s mind.
  4. Remind customers to check their account activity often, and report any unfamiliar transactions to the FI.

As FIs continue to utilize ATMs for both convenience and cost-savings, the frequency of skimming attacks will only increase in both volume and sophistication. Should these attacks be thwarted, FIs, customers and law enforcement must stay vigilant and ahead of the criminals and their ever-advancing technology.

Does your FI already have preventative measures in place against skimmers? Let us know in the comments section below or Tweet @bankingdotcom.

Editor’s Note: David Sutton has a BA in economics and a MS in business journalism, and his articles have appeared on Forbes.com and in the Boston Business Journal. David has had a bank account since he was three.

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