[SCAM] Have You Been Skimmed?

Category: Finance

The fastest-growing threat 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?

The Secret Service estimated that skimmers stole over $1 billion in 2014. The number of ATMs compromised by skimming increased nearly sixfold from 2014 to 2015, 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. 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.

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. That’s why so many ATMs now have plastic shields around their keypads, and why ATMs urge you to cover the keypad with your hand while entering your PIN, even though 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 anyone nearby to see what numbers you actually press.

How Are ATMs Protected?

Bank-owned ATMs are policed rigorously by the banks themselves. They send out inspectors to check ATMs for skimmers. But non-bank ATMs, such as the standalone machines found in mom-and-pop 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] Have You Been Skimmed?"

Posted by:

Larry M
29 Apr 2016

My card information was stolen several years ago and I was out $300. My bank was very quick to refund 80% of that money until their 2 week investigation was complete. I was lucky that it was only $300 but I still felt violated. I am much more careful in how I handle electronic transactions now. My son however is not so careful. In the past year his card information has been stolen at least three times. Probably from service station pumps.

Posted by:

29 Apr 2016

Yes both my debit over $6000 and credit card $3000+ the credit card co. put a stop payment on my credit card before I saw it. About a week latter they hit my debit card I was checking my account the same day they used it in Atlanta Ga in Tn & Tx the same day. The credit Union replaced all of my funds the next day. It pays to check your acct. every day.

Posted by:

Julia Mason
29 Apr 2016

A few years ago my debit card number was skimmed and it had never left my wallet.They took everything I had in my account plus my pay check I had just deposited. I filed a fraud case with my local police and my bank was able to get back most of the money minus about $50.00. So now I do not use the debit card in public or order online with it.If I want to order something online, I will put a certain amount of money on a prepaid debit card, so if it gets skim they will only get what is on that card,not my bank account.

Posted by:

29 Apr 2016

The ATMs at the bank use the machine that takes the card into the machine itself. No swiping. Are they free from skimmers? I would like more information as to how they install these skimmers without being caught. I appreciate the tip on the two finger entry. Seems to me the POS machines that only require you to enter your zip code are especially vulnerable since most people shop close to where they live. All in all a great article. Thanks Bob.

Posted by:

29 Apr 2016

I've had the information from 2 different credit cards stolen, but not from ATM machines. I think one was skimmed at a gas station with "pay at the pump" card readers. Luckily, I had setup alerts for "card not present" purchases and found out very quickly that someone was making purchases on both cards. In both instances, a phone call to the customer service departments of each issuer saved me a lot of headaches and money.

One very disturbing experience was when I had my debit card information stolen -- and I had never used the debit card once! That was several years ago. I've never used a debit card and probably never will.

Posted by:

Robert A.
29 Apr 2016

Gas pumps are a common site for skimmers. I've heard that the pump manufacturers use a small assortment of keys to unlock the panel where the card slot is located, and that the keys are easy to obtain on the Black Market, or that pumps are easy to jimmy open with a screwdriver. Some, but not all service stations put a safety seal, not unlike those found on certain OTC medications, across the panel frame to visually indicate if the door has been opened by someone other than the station employees.

To be totally secure, experts say, one should spend a couple minutes more, and pay inside at the cash register, where it is unlikely for crooks to install a skimmer.

Posted by:

30 Apr 2016

Disconcerting, to say the least... but I am very cautious about how and when I use my card. And I try to complete as many transactions as I can via cash (I'm in the minority, I know). I've often wondered if these jerks even need someone's PIN, once they've skimmed the card. It's just four digits, and it looks like they could just acquire the PIN with some kind of 'brute force' tactic.

Posted by:

Grant Brown
30 Apr 2016

Years ago, Canadian banks and retailers converted to chipped debit and credit cards as in European countries. I used my debit and credit cards confidently in Sweden, Finland, France and Spain.

When I was in New York City last year, no retailer had a chipped reader. Fortunately I had brought sufficient cash so I could avoid the primitive systems New York City retailers continued to rely on.

Posted by:

01 May 2016

Cupping one hand over the keypad is a great idea. I will implement that into my security techniques which are:
I always take a close look at the slot that the card is supposed to slide into before I insert my card. If it does not look right (scratches, glue, etc.), I will not use it.
I also try to give it a wiggle as (I have heard) most skimmers do not fit in the slot tightly. If it feels loose, I will go elsewhere.
Thanks for the article, Bob. :-)

Posted by:

David Simkin
01 May 2016

As always a great article - the 2-finger tip is something I'll try in future.
A problem here in Australia, and probably everywhere, is sales assistants wanting to take your card to process a sale, when we know that some unscrupulous people use this method to copy card info. It's particularly annoying when you want to use the wave-type function.

One off note, Bob, please stop the double-negative use!
"So-called chipped cards are not invulnerable to skimming yet". Surely "..are vulnerable.." would be clearer.

Posted by:

L. Broy
08 May 2016

I was watching your show today Saturday 5-7 at about 530 p.m. and a new show came on showing us how to make large amounts of money they asked for our names email accounts and passwords after I gave them the information the program disappeared and I cannot find the feed anymore. Are you aware of this happening and how do I stop the information loss and is this program a scam and should I call my bank to stop the loss aof money. Thks,I am one of your subscribers. L.Broy

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