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 and in the Boston Business Journal. David has had a bank account since he was three.

Reality Check

In case you missed it, Google released a video last week showing off their new augmented reality glasses. Pretty neat stuff. And now according to American Banker, the glasses can be utilized for financial services.

So far PNC Bank is the only financial institution to offer a use for the augmented reality device — a bank and ATM finder. Pretty handy really, but I am having a hard time seeing how this is much of an improvement over a map on a smartphone or tablet. Do we really need to walk around with a cyborg-like eyepiece and display?

Google should be concentrating on getting Google Wallet off the ground. Launching 10 more Sprint phones supporting Google Wallet at Mobile World Congress was a good start. Previously only the Nexus S 4G offered the required NFC infrastructure. When coupled with the need for retailers to commit to the system as well, the outlook was pretty hazy.

Google did just acquire TxVia, the mobile payments tech company, in theory to shore up the much-criticized security issues hampering the wallet. It’s safe to say Google is not yet ready to abandon the mobile payments ship despite earlier rumors that Google is shelving the project amid all the competition.

And, let’s face it, mobile payments are very popular lately with everyone and their mother trying to get in on the action. PayPal, the incumbent in the online payment space, recently released a card reader aimed at merchants. Called PayPal Here, it was a direct shot across the bow of mobile payments leader Square, and their dongle.

Perhaps some futuristic glasses are just what Google needs to propel them to success in mobile payments. They are creating at least a little buzz in an otherwise dry and jargon-filled market. The glasses actually make a lot of sense in an urban setting, where the real-time information would be most helpful. And let’s be honest, anything would be an improvement over people walking around staring down into their smartphone.

To summarize: we now have a battle royale brewing that includes software, cellphone, banking, and other technology companies; executives bouncing around between competitors; and new players entering the fracas (Tappmo, founded by ex-Google Wallet engineers, to name one).

By the time this is posted the landscape will most likely have shifted again. Don’t forget about Facebook either. They’ve been mentioned on this blog before as another army in the payment war.

It will be interesting to see what partnerships are formed to try to gain an upper-hand in this scrum.

No one knows how long the mobile payments war will drag out and who will be left standing. Or, if they will use augmented reality glasses, a dongle, a camera or some other newfangled, yet to be invented, device to dominate the mobile payments market.

As it stands right now, I’ll take augmented reality glasses over another dongle any day.

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