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ATM skimming on the rise

Fraud involving ATM skimming is on the rise, according to data from FICO Card Alert Service, which monitors transaction data for bank clients. FICO doesn't release specific numbers, but recently reported a nearly 550 percent increase nationwide in the number of ATMs compromised by criminals in 2015 compared with 2014. Skimming is by far the most common way fraudsters obtain card data, according to FICO.

There are a wide variety of ATM skimming devices, but many involve a card reader that can be affixed on top of the genuine card slot to “skim” card details from the magnetic strip on the back of a card. Since debit cards typically require a four-digit personal identification number, an ATM with a skimming device also often has a false keypad or pinhole camera to record digits as customers punch them in.

Migration to so-called “chip and pin” or EMV that is being rolled out in card readers nationwide will likely cut down on ATM skimming devices, but in the meantime, criminals are actively trying to get as much money as possible from skimming before it becomes less lucrative. Many in the industry are bracing for a counterfeit card fraud spike as crime rings realize that the window is slightly closing, so they are going through stocks of cards and doing their worst while they still can.

While criminals often target bank-owned ATMS, criminals are increasingly targeting nonbank ATMs, such as those in convenience stores and gas stations which may be less closely monitored. This is extremely important to independent ATM operators as October 1, 2016 marks the first of two dates that will shift liability for fraud from the financial institutions issuing cards to either ATM operators or the issuing institutions, depending on which has less up-to-date EMV technology.

According to the ATM Industry Association's 2015 Global Fraud Survey, ATM operators estimated losses from a skimming device placed on a single ATM ranged from $5,000 to $100,000 and averaged $650 per card.

ASR specializes in providing insurance and risk management advice to help financial institutions and independent ATM deployers withstand the potentially catastrophic costs of a card=skimming attack. Call us today to learn more.

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