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.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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