The Daily Record, July 2016

Since their inception in 1969, Automated Teller Machines (“ATM’s”) have made banking very convenient, saving time by eliminating the need to go inside the bank, and allowing consumers to do their banking off-hours. Today’s ATM’s are sophisticated computer systems that can do almost anything a human bank teller can do. With the convenience and continued development of these machines also comes the risk that scammers will take advantage of the technology and the consumers using them.

According to FICO, a credit-scoring and analytics firm, from January to April 2015, the number of attacks on debit cards used at ATM’s reached the highest level for that period in the last 20 years, jumping 546% from 2014. Of the total compromises, 60% were at non-bank ATM’s, up from 39% in 2014. While it is difficult to measure exactly how much money is stolen each year, industry estimates suggest as much as $2 billion may be lost to ATM scams each year. 

In the news

There have been several articles in the news recently warning consumers of the scams that are currently out there. Four individuals from North Carolina were recently arrested for an ATM skimming scheme. Another man from Boca Raton was arrested for placing skimmers over legitimate card slots, stealing more than 300 customers card information from Miami-Dade, Broward and Palm Beach counties. Several other scams were uncovered outside of the United States as well. There was one in Japan last month that targeted ATM’s at convenience stores. Authorities believe over 100 people were involved, getting away with almost $13 million.

With over 3 million ATM’s worldwide, it is important to be aware of the different types of scams and how to protect yourself. 

Different types of ATM scams

The following are several examples of common ATM scams:

• Card skimming: The most common scam, the perpetrator uses a card reader to capture the data from the magnetic strip of the card. Sometimes the card reader is installed right on top of the ATM’s card slot.
• Cash trapping: A false ATM presenter is placed onto the cash out shutter of the ATM machine, which traps the cash when the cardholder tries to withdrawal money. Once the cardholder leaves to notify the bank, assuming there is an issue with the machine; the perpetrator removes the trap and takes the cash.
• Fake assistance: This scam usually targets the elderly, asking them if they need any assistance at the ATM machine. While “helping”, the perpetrator is memorizing the card number and pin to use later on.
• Shoulder surfing: Looking over the shoulder of the cardholder to see the PIN that is being keyed in.
• Fake PIN pad overlay: A device that looks like the ATM’s keypad is placed on top of the ATM machine and captures the PIN entered by the cardholder.
• ATM Hold-up: Although not very sophisticated, the cardholder is held up at gunpoint or with a knife while trying to take money from the ATM.
• “Lebanese Loop”: A metal or plastic strip is installed into the ATM card slot. When the card tries to eject, the loop prevents it from ejecting and cash is not dispensed. When the customer goes into the bank to complain, the thief removes the loop and has access to your bank account and cash.

How to protect yourself

The Better Business Bureau (“BBB”) released the following recommendations for ATM use: 

• Do not use public ATM’s. Use bank ATM’s whenever possible. It is typically more secure to use ATM’s at banks rather than standalone machines.
• Protect your PIN. Place your hand or piece of paper over the keypad when entering your number.
• Look for signs of skimmers. Tape is often used to attach skimming devices. If something looks odd, wiggle it to make sure it doesn’t come loose.
• Be wary of strange signs. Some con artists attach signs to ATM’s providing alternate instructions, such as telling user to swipe their card on a separate reader first. If something looks out of place, find a different ATM and report the one you were at to the bank or police department.
• Examine the machine for anything that looks unusual, a keypad that looks newer than the rest of the machine or any parts that are a different color.
• If someone offers to help you use the ATM, immediately decline and leave.
• Be cautious of ATM failures. If the machine doesn’t give you your money, or gives you a message that the machine malfunctioned, don’t just leave. Call the financial institution to let them know.
• Monitor your bank accounts on a regular basis for fraudulent activity.
• Only use ATM’s that have security cameras.
• Never leave your card in an ATM, even if it’s only to inform the bank of a problem. Call them and tell them you are at an ATM and there’s a problem.
• Report any problems. Only call a number you know is real, such as the one on the back of your card. Don’t call a number posted next to the ATM, as that could be part of the scam.The BBB believes the spike in the scams may be related to banks rolling out new chip cards, which have encryption technology to make them much more difficult to hack. According to a survey by the ATM Industry Association, nearly 60% of U.S. ATM operators said they expected at least 75% of their ATM’s to accept chip cards by the end of 2016. Until these are fully integrated into ATM’s and other financial institutions, scammers are going to take full advantage of the current systems that are in place. Even after they are fully integrated, it will still be possible to skim card details as long as the chip cards also have the traditional magnetic strip.

Be Skeptical

Always remember to observe your surroundings and try to limit yourself to using familiar ATM’s that have video surveillance. Help protect yourself by signing up for alerts and notices on unusual withdrawals from your bank, and check your account balances on a regular basis. Report anything that looks suspicious to your banking institution or local police.