By Warner Johnston
Lately, it appears that the odds are not in any consumer’s favor in the United States when they head to the ATM. The most recent victim locally appears to be Flushing Bank, where reports indicate about 120 people have had their accounts hacked.
Investigators are scrutinizing where the theft began – at the bank or with card numbers stolen elsewhere. Nevertheless, they also question whether skimming devices were used to pilfer the data.
It’s a troubling trend. Skimmer fraud is a huge problem both in the United States and around the globe. While skimmers— electronic devices used to read and store electronic data— have existed for many years, they have advanced quite considerably over time. They now are smaller and have more memory.
The Association of Chartered Certified Accountants and Pace University recently released a report that identified the myriad ways in which skimmer scams are proliferating, noting that in 2011 the average loss from skimming crime was $50,000, up by $20,000 from the previous year.
The U.S. was ranked No. 1 in the world in terms of financial losses associated with skimming fraud in the first six months of 2011, followed by the Dominican Republic, Russia and Brazil.
There are 2.2 million ATMs worldwide, which will escalate to more than 3 million by 2016. Our report noted that a new ATM is installed every five minutes, and North America has the largest ATM market in the world, with the most – approximately 425,000 – in the United States.
The risk of being victimized is greater than ever. This is a war being fought at the ATM, gas pump, and at every retailer large and small, at the intersection of street crime and tech crime.
Without significant steps being taken to combat this activity, it’s clear that this type of fraud will continue to escalate. The future of ATM transactions lies in contactless cards, biometric security, and smartphone withdrawals instead of traditional ATM cards.
Meanwhile, customers should take heed: Use one hand to cover the keypad while entering your PIN and be careful of criminals “shoulder surfing;” regularly monitor your accounts, financial statements, and credit reports to be alerted to skimmer fraud or any type of identity theft; and provide financial institutions with up-to-date contact information, including a mobile telephone number.
Banks have an obligation as well. They need to ensure that ATMs have ample lighting and good visibility. They also should install cameras with ample memory to store video recording suspicious activity at ATMs. And, they must ensure that technology is installed to alert them when criminals are fitting overlay devices.
As other markets across the globe revolutionized their systems, criminals have continued to set their sights on the United States because of our weakened technology.
Warner Johnston
ACCA USA
New York
