[SCAM] Beware the ATM Skimmer Scammers

Category: Finance

One of the fastest-growing threats to financial networks is not malware, phishing, or denial-of-service attacks. It’s ATM “skimming,” the illegal capture of debit card data including PIN numbers by a “skimmer” device inserted into an ATM. Here's what you need to know...

How Does ATM Skimming Work?

It is estimated that ATM skimmers result in losses of over $2 billion each year. And the number of ATMs compromised by skimming increases 40% annually, according to the FICO Card Alert Service which monitors hundreds of thousands of ATMs for the nation’s banks.

Skimmer devices have improved dramatically in recent years. A modern skimmer may be little thicker than a debit card, and slips invisibly into the same slot into which you slide your card. Some are installed as overlays on the card reader slot. Inside is a tiny computer, magnetic stripe reader, and storage device. When an unsuspecting victim uses the ATM, the skimmer reads the card’s critical data from the stripe.

And even if you have one of the newer cards with a chip built in, you could still be affected. According to Brian Krebs of Krebs on Security, "many chip-based cards issued by American and European banks alike still have cardholder data encoded on a magnetic stripe in addition to the chip."

Fortunately, consumers are rarely the ones who absorb skimming losses - directly, that is. Under the Electronic Funds Transfer Act (a 93-page PDF), consumers are generally not liable for funds stolen from their bank accounts via frauds such as skimming, as long as they report the losses within 60 days of their occurrence. Financial institutions take the hit directly -- but of course, they seek to recoup their losses from customers in other, legal ways.

ATM skimmer scams

Capturing card data is only part of the fraud formula; the thief also needs your PIN. So tiny cameras are usually installed unobtrusively near the ATM’s keypad to record the buttons you press. Newer skimming devices incorporate infrared transmitters to send the captured data to the camera, so both your PIN and the card data can be captured. Some skimmer scammers even use overlays on the keypad, to capture your PIN.

Many ATMs now have plastic shields around their keypads, and banks urge you to cover the keypad with your hand while entering your PIN, even if no one is looking over your shoulder. I've always used the "two finger method" for entering my PIN number at the ATM. Point two fingers at the keypad, but only press with one. This makes it impossible for hidden cameras or anyone nearby to see what numbers you actually press.

How Are ATMs Protected?

Bank-owned ATMs are usually rigorously policed by the banks themselves. They send out inspectors to check ATMs for skimmers. But non-bank ATMs, such as the standalone machines found in convenience stores, are not so vigilantly policed. FICO reports that 60% of skimmer-compromised ATMs are non-bank machines. So you may want to avoid them to reduce your chance of being skimmed.

Unfortunately, we live in a world where financial scams are becoming ever more common. My article 10 Tips for Identity Theft Protection will give you practical tips you can use to protect yourself from financial scams at home, in public places and online.

You should be especially careful when using non-bank ATM machines in tourist locations. Security researcher Brian Krebs wrote a fascinating article, Who’s Behind Bluetooth Skimming in Mexico? which details how ATMs in popular Mexican tourist destinations are being hacked. But the problem isn't limited to the withdrawal of cash at automated teller machines. Point of sale terminals at gas stations and other retail locations that aren't under constant surveillance can also be compromised. Any time you swipe your card, you should be wary.

So-called chipped cards are not invulnerable to skimming yet. Many U.S. merchants have not upgraded their card readers to use this enhanced security, so chipped cards still have the magnetic strips that skimmers can read. Banks can hardly wait for all card readers to be upgraded so that the magnetic strip can finally be eliminated. Many are offering merchants incentives and penalties to push them into this upgrade.

Telltale signs that an ATM may harbor a skimmer include a card slot housing that seems loose or wiggly; glue around the housing; and unusual difficulty inserting your card. If you stick to using just a few bank ATMs, anything unusual that appears in them will be more readily apparent to you.

Sixty Days or Six Hundred Dollars?

With skimming skyrocketing, your best defense is to monitor your bank accounts for unusual activity regularly, and report any unauthorized transactions well within the 60-day time limit. Even though the law protects you against losses due to fraud, you may find yourself out some serious money for a few days or weeks while your bank processes your fraud claim. The average amount of money lost per skimmed card is $600, according to FICO. That’s not chump change for most of us.

Have you or someone you know been skimmed by the scum that schemes to scam, as you withdraw funds from an ATM? Your thoughts on this topic are welcome. Post your comment or question below...

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Most recent comments on "[SCAM] Beware the ATM Skimmer Scammers"

Posted by:

Robert Vellios
02 May 2018

Thanks, good article.
So to minimize but not eliminate the risks of being scammed, would it be best to just stop using your debit card and only use a C.C, which has greater protections?

As for the chip card, many merchants have yet to convert, which if I recall correctly makes them liable at some point. And some merchants I'm aware of did convert and then went back to the stripe read only.


Posted by:

02 May 2018

Very good on skimmers. I didn't see the listing for gas stations which is another very good area for them to hid the skimmer. The big reason I always walk the few feet to pay inside. Thanks for another great article and in sight to being ripped off. Again thank you.

Posted by:

02 May 2018

If a merchant does not have a chip reader on the machine at his place of business, he is obviously increasing his risk; I would prefer to not do business with such a merchant. Is there a method to disable the stripe on a debit card so that I must use it in a chip reader?

Posted by:

02 May 2018

I bought gas at a local station about 1 week ago. Had trouble inserting and retrieving my card. Reported problem to attendant who said it was due to accumulated (desert)dirt in slot. Lots of crime here in the "Land of Enchantment".
Who do I report this "possible" incident to?
Thanks for keeping US informed Bob.

Posted by:

02 May 2018

Thanks Bob for this timely article.

We have "fought back" when at almost every visit we make to our Bank to withdraw cash, employees encourage us to use the ATM instead. A manager was even stalking the line a couple of times, removing people to "show them how easy it is to use the outdoor ATM". We now brightly say we need different bills to twenties, and so far that stops the exchange.

As Robert remarked, Credit Cards give better protection, but for most it would be unwise to use a CC for a cash withdrawal if you usually pay off your bill each month and don't accrue interest. A cash withdrawal would accrue interest on all spending for two statements as I understand it.

Gas station pumps IMO are the worst place for skimmers, as many are in darkness overnight making it easy for the crooks to work. For this reason we don't use the smaller, cheaper, off brand independent gas stations that are unlit at night.

Vigilance and setting up alerts for all accounts is now sadly needed.

Posted by:

02 May 2018


If you are 100% sure you will never need to use your card at a vendor that does not support chip technology I would imagine the low tech answer would be to scratch most of the stripe away.

Posted by:

02 May 2018

Most of these solutions will not work for me and those like me. I ride a wheelchair and ATMs are not designed for people like me. I am below the keypad when I approach the ATM so my solution is to not use them. Makes life a little more complex but the added security is worth the inconvenience.

Posted by:

02 May 2018

"We now brightly say we need different bills to twenties, and so far that stops the exchange."

The word "No" followed by the the question "Should I find another bank?" if the encouragement continues, will work just fine.

Posted by:

02 May 2018

When ATMs were introduced, it was said that they'd save the banks lots of money (because they could get rid of tellers). With all the money that's being lost because of skimmers, it seems it's time to re-hire bank tellers and get rid of some of the ATMs.

Posted by:

02 May 2018

Great article on skimmers.

A couple of years back, Bob Rankin did a good article on chip cards, possible fraud issues with them, and how to best address any thefts. Look it up, or perhaps we'll see an update. :)

Posted by:

Bab Krinno
02 May 2018

@Lucy "We have "fought back" when at almost every visit we make to our Bank to withdraw cash, employees encourage us to use the ATM instead. A manager was even stalking the line a couple of times, removing people to "show them how easy it is to use the outdoor ATM"."
I agree, keep cash and keep human beings, and keep them in jobs, human beings are so much nicer than ATM's.
I even refuse to use self service checkouts in supermarkets, I'd rather queue for a real person.
All these people using the self service checkouts, have they got a job/did they have a job, did they like having the money from having a job, I think the tellers and the checkout staff like having a job or the money from actually having a job too.

Posted by:

02 May 2018

I am assuming that a significantly strong (aka rare earth magnet) will effectively kill off the mag stripe. Those of us who had good tape decks probably have demagnetizers for the heads and tape. Either would probably do but my one for the tape could actually pick up a full 7" reel of tape.

Posted by:

02 May 2018

Where I live, most of our local merchants now support chip reading as well as contactless payment methods, such as Apple Pay, Samsung Pay or Google Pay. It seems the only places where we are still seeing the mag strip readers are filling stations.

Unfortunately, the pump readers don’t usually work with Samsung Pay, since the cards get fully inserted rather than just swiped. That is unfortunate, as Samsung Pay is a good alternative when a reader is only a mag strip reader. Samsung Pay can work with a mag strip reader without actually having to insert the card or swipe the strip. Therefore, if there is a skimmer, it is bypassed. And, Samsung Pay also uses tokenization even when processing a payment with a mag strip only reader.

It will be good when the mag strip readers are fully replaced, though.

Posted by:

02 May 2018

I have nothing against bank tellers, cashiers and jobs but I do resent long lines and slow staff. Time waiting on them costs me money I can't afford.

Posted by:

Hardie Johnson
02 May 2018

My way to avoid skimming is to go to the bank teller or get my cash from the grocery store cashier.
"I'll have a gallon of milk and $300 please"

Posted by:

03 May 2018

Why banks and others using ATMs are not required to examine the ATMs once an hour or so for skimmers is beyond me. Many skimmers are not discovered for days, got to ask why.

Posted by:

03 May 2018

To "Larry" in a post above: I would imagine there is something on the ATM that gives the details on the company from whom the station is renting the ATM. Maybe even lucky enough to have a phone number. The nonchalant attitude of the gas station clerk is also unacceptable.

Posted by:

03 May 2018

I had a debit card cloned from inside an HSBC branch in Rio de Janeiro many years ago. And from a local gas station not so many years ago. Have more than one current account, maybe one for ATM use only with a limited balance to avoid being overdrawn or having regular payments rejected for 'insufficient funds'.

During my many business trips abroad in last two decades I use a CC to withdraw cash, that way my bank account is not at risk of being overdrawn. To avoid cash interest rates I normally pay into my credit card a day in advance a sufficient amount to cover the likely foreign withdrawal, which usually zero's any interest.

Posted by:

04 May 2018

I am just old enough to still work from this old fashioned thing called "cash" - I know it might sound foreign in this world of technology but I have worked well with it for years and NEVER had an issue being scammed with it. On a more serious note, I like the idea of using the same ATM and two fingers.....both of which I have adhered to for years and so far so good. Isn't it interesting to read all the studies being done about the adverse affect on the "technology" generation due to losing skills of dealing with people and each other - I am a "give me a real person" kind of gal and always will be whether that be in a grocery store, on the phone or any other way that I have an option - I will USUALLY choose PEOPLE over machines (the teller option at the bank is becoming increasingly more difficult to avail myself of though due to decreasing staff and bank locations). There...that is my wee rant for this post!

Posted by:

06 May 2018

Wow, a great article Bob and some excellent comments by your readers!!! High Five to all.

I use my Debit Card and the places I go to, these days is mainly Walmart and Sam's Club. I don't drive anymore, but will use my DC at well known gas stations that are very highly lit, at all times of the day!!!

Both Walmart and Sam's Club use the Chip for their transactions now a days. It does save time and energy for them and the customer. You only need to slide it into the slot and wait to key in your PIN number. I do like that and don't have to worry about whether or not the magnetic strip is going to work or not.

I am willing to bet that the usage of the CHIP in the CC and DC is widely used in Metro Cities. It would be the rural areas that are having the most problems. Rural people tend to think they are not part of the problem, like the Metro Cities are. This is not really good thinking at all. Yes, it would be so nice to live in the past, but the true is. . .We do not and have not for decades.

Now, being the Devil's Advocate. . . Is using the CHIP safer???!!! I doubt it. The Hackers and Crackers will find a way to "break the codes" and SKIM your card. This is our daily reality in today's technology. Damn, I do wish it wasn't true, but it is. This is why we MUST protect ourselves at every point in our lives, to succeed. I am not being melodramatic, just realistic.

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