ATM skimming fraud became an increasingly serious concern as criminals intensified their attacks on cash machines and other payment terminals. As consumers continued to rely on ATMs for convenient access to their accounts, fraudsters exploited vulnerabilities in card technology and ATM security to capture card numbers, PINs, and other sensitive information. Research showing a dramatic increase in compromised ATMs highlighted the need for financial institutions and independent ATM operators to strengthen their defenses.
The rapid rise in attacks also demonstrated how quickly criminals could adapt their strategies. Rather than maintaining skimming operations for extended periods, fraudsters increasingly favored short, targeted attacks designed to collect card data before banks could identify and stop the compromise. With non-bank ATMs accounting for a growing share of incidents, ATM operators needed to evaluate security measures across both their technology and physical infrastructure.
Automated Teller Machines (ATM) have become so common that there is an entire generation that can’t remember going inside the bank to cash a check. Most of us trust these machines without giving them a second thought.
New research from FICO, an analytic software firm, suggests that this trust could be misplaced. It reports the number of ATMs compromised by criminals rose 546% in 2015. The total number of compromised ATMs was the highest ever recorded.
ATMs can become compromised when a criminal installs a “skimmer” over the machine’s key pad. When a consumer keys in his or her PIN, the skimmer captures the number, giving the criminal access to the consumer’s bank account.
The scammer might also install a tiny camera that can record the debit card number and PIN.
While the number of compromises rose sharply last year, the research found that the compromises didn’t last as long, either because they were discovered, or more likely, because criminals reduced the time spent harvesting card data in an effort to reduce risk. T.J. Horan, vice president of fraud solutions at FICO, said it appears criminals are taking a “quick-hit” approach to ATM theft.
“They are moving faster to make it harder for banks to react and shut down the compromises,” Horan said in a statement. “They are targeting non-bank ATMs, which are more vulnerable — in 2015, non-bank ATMs accounted for 60% of all compromises, up from 39% in 2014.”
With mag-stripe-equipped cards enjoying their last hurrah before the widespread adoption of EMV, scammers and other fraudsters are accelerating their efforts to target ATMs and POS devices. And with a “quick-hit” philosophy, many criminals are targeting ATMs likely to be more vulnerable, often those operated by independent deployers or smaller financial institutions. This is why ATM operators of all sizes should be working closely with their technology and services partners to ensure they are employing the latest anti-fraud measures available.
The surge in ATM skimming fraud illustrates the continuing challenge financial institutions face as criminals adjust their methods in response to changes in payment security. Even as the industry transitions toward more secure card technologies such as EMV, fraudsters are likely to concentrate their efforts on remaining vulnerabilities and on ATMs and payment terminals that may not have the strongest protections in place.
For banks, credit unions, independent ATM deployers, and their technology partners, preventing ATM skimming fraud requires more than relying on improvements in card technology. Operators must continually assess their terminals, deploy current anti-skimming and fraud-detection measures, and monitor for unusual activity that could indicate a compromise. The significant growth in ATM attacks reinforces the importance of a layered security strategy that can evolve alongside emerging fraud tactics. Protecting ATM transactions ultimately depends on staying ahead of criminals who are increasingly willing to move quickly from one vulnerable target to another.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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