ATM skimming is a growing source of fraud that shows no signs of abating, says Shirley Inscoe, a financial fraud expert and analyst at the consultancy Aite Group, which just issued a new report about ATM fraud.
The report confirms skimming is U.S. banks' biggest ATM fraud concern, Inscoe notes. Skimming has continued to grow worldwide, despite the rollout of EMV chip cards, because most payment cards still retain a magnetic stripe.
But other factors are contributing to the growth of skimming in the U.S., Inscoe explains in an interview with Information Security Media Group. "We as consumers use ATMs all the time to withdraw money, and that means, in order to reduce operating costs of servicing those machines and replenishing that cash, more and more [U.S.] banks are going to go to larger bills in the machines," she says. "As they do that, it makes the ATMs more attractive to theft. Certainly, if you think about a jackpotting scheme, where you're dispensing fifties instead of tens and twenties, that becomes a very attractive scheme."
Other ATM Threats
In addition to skimming, physical attacks, such as those involving explosives, also are on the rise in the U.S., Inscoe says (see ATM Attacks: Why We Must Remain Vigilant).
"We've seen a real upsurge in explosives being used to break into these machines to steal the money," she says. "We have seen physical theft of the entire ATM itself. ... Because of the low risk of getting caught, and a very high potential reward in the amount of money they might gain, we are really seeing an uptick in this, to the extent that some large banks are now putting in the ability to tell when that machine moves at all - to send off an alarm so that they are aware that the machine may be in the process of getting stolen."
In this interview (see audio link below photo), Inscoe also discusses:
- Why the malware attacks waged against Windows XP ATMs in Europe haven't yet spread to the U.S.;
- Why smaller U.S. banks and credit unions aren't well prepared for some of the emerging attacks now being waged against ATMs; and
- How ATM skimming and other ATM-related fraud stacks up relative to banking institutions' other worries, such as ACH/wire fraud, cyber intrusions and spear phishing attacks.
At Aite Group, Inscoe specializes in the analysis of financial services fraud trends and banking technology. She is the former director of payments strategy and strategic support manager of enterprise loss management for Wachovia Bank and also previously served as corporate compliance manager for First Union Corp. She also is the co-author of Insidious: How Trusted Employees Steal Millions - and Why It's So Hard for Banks to Stop Them.