Vigilance, technology and member education are the best deterrents to ATM fraud.
Skimming devices aren’t what they used to be—gone is the clunky hardware, sometimes sporting bits of falling plastic. Like the entrepreneur-crooks who use the devices to defraud members at the ATM or the gas pump, the devices themselves have evolved to be more difficult to detect.
For example, today’s skimmers are much smaller—no bigger than a debit card, easier to install and designed to fit right within the card reader, says David Ver Eecke, senior fraud product manager for CUES Supplier member PSCU, St. Petersburg, Florida. In fact, today’s skimmers are so small that cardholders may not notice anything amiss. The use of lithium batteries to power today’s devices means they can operate for longer periods, and an attached camera often is used to record the user’s PIN.
Skimmer-crooks—now part of cottage industry compared to the large crime rings of the past—can purchase their devices on the dark web from sophisticated manufacturers that offer manuals and instructional videos online, Ver Eecke says. Later, these fraudsters go back to the dark web to sell the card numbers and expiration dates they’ve collected to other criminals.
These days, skimmer-crooks target ATMs in secluded, out-of-the-way locations. “They may keep the (hardware) skimmers in place for a while, capture the card data and then remove them, or use Bluetooth or cellular technology to collect the information to avoid the risk of retrieval and maintain anonymity,” says Ver Eecke.
“In Europe and Asia, skimming technology is more mature, and we see trends emerge earlier,” he adds. “These markets are now experiencing new ‘eavesdropping’ techniques, where fraudsters use an endoscope (a tube camera also used in medical testing) to place a device between the card reader and circuitry, to read and interpret the transmission of data. There are also ‘cash trapping’ devices using a false cash door to trap the user’s cash, ready for the crook’s access.”
Staying a Step Ahead
PSCU’s team leverages dark web intelligence to craft custom, proactive strategies to protect its owner credit unions from skimming fraud.
“As a CUSO, we leverage our cooperative data to provide additional security for our owner credit unions and their members,” Ver Eecke explains. “For example, if a member shares a trouble spot, we run an analysis on the machine to see who may have been impacted; we scrutinize for potential nefarious activity and share that information with all owners. And we adjust fraud strategies accordingly to protect these credit unions. We also work closely with law enforcement, sharing intel to catch and prosecute criminals.”
The ATM industry is also working to prevent skimming with new “jamming technology,” so that if a skimmer device is present, an electromagnetic pulse blocks its recording abilities before the data is captured. More specifically, the pulse adds “noise” so that the skimmer can’t read the data from the card, but the ATM’s card reader is still able to access the information to complete the transaction.
“Prevention is still the best way to protect your members,” says Ver Eecke. “This includes checking your ATMs regularly, ensuring ATM cameras are in place and working properly, and reminding staff to report suspicious activity immediately. Also, network with other financial institutions and partners like PSCU, as well as law enforcement agencies,” to keep abreast of what’s going on.
Member education remains central to fraud prevention as well. Encourage the use of well-known ATMs and gas pumps in high-traffic areas, observing the ATM or pump’s appearance, and taking measures for PIN protection (such as hiding your PIN entry with your free hand); and, if something doesn’t feel right, suggest that members leave and find a new location.
Stephanie Schwenn Sebring established and managed the marketing departments for three CUs and served in mentorship roles before launching her business. As owner of Fab Prose & Professional Writing, she assists CUs, industry suppliers, and any company wanting great content and a clear brand voice. Follow her on Twitter @fabprose.