Guard your card
By Fiona Wagner • Bankrate.com

Canadians love their debit cards, and we're among the biggest users of automated teller machines, or ATMs, in the world. In 2004, Canadians made more than 1.1 billion transactions (an average of 81.7 per person) at almost 57,000 bank and private ATMs. Of the 22 million adult Canadians, 86 per cent hold a banking card and 34 per cent use ATMs as their primary means of conducting financial transactions.

It's no surprise, then, that research shows the majority of Canadians find ATMs to be convenient and easy to use. But media reports of multimillion-dollar debit card scams and organized crime rings have left some people questioning the security of our once infallible ATM system. While countries such as Europe, Asia and many in South America are using more forgery-resistant technology, including smart cards that have information encrypted in an on-card microprocessor, Canada still relies primarily on magnetic stripe technology.

So just how safe is Canada's ATM system, and what can you do to protect yourself?

"Canadians can continue to use their cards with confidence," says Maura Drew-Lytle, senior manager of media relations for the Canadian Bankers Association. "It's a very convenient and secure system, and there are always things going on behind the scenes to protect Canadians."

Banks are already monitoring and checking our accounts for unusual, possibly fraudulent, activity, and the Interac Association says Canadians will start seeing smart cards and other chip technologies in 2007.

That said, law enforcement agencies and the banking industry admit that ATM fraud is a serious and growing concern. According to the RCMP, while credit card fraud has been rising steadily since the 1990s, ATM fraud is considered an emerging trend. Advances in technology have made it easier for criminals to tamper with legitimate ATMs and give crooks easy access to cash rather than goods that have to be sold to make money.

"ATM fraud is on the rise in general," says Tina Romano, public relations manager for the Interac Association, with losses rising from $60 million in 2004 to $70.4 million in 2005. "But if you put that in perspective, (fraud) affects less than 0.03 percent of all transactions."

"In 2005, only 0.2 percent of cards in circulation were involved in some sort of skimming incident," says Drew-Lytle. "The numbers are still low and we want to keep them that way."

How does ATM fraud happen?
For fraud to occur, thieves need both your personal identification number, or PIN, and the information stored on the magnetic stripe on the back of your debit card (this includes your card number, expiry date and language code).

Fraudsters have a veritable bag of tricks to get between you and your hard-earned cash using tools that can even be purchased online from legitimate technology suppliers. In one common scam, thieves place a false card reader over an ATM's card slot and hide a miniature camera above or near the keypad. When you insert your card, the card reader scans the information embedded on the magnetic strip while the camera records your keystrokes. The thieves then duplicate your information onto a blank card that can be used, along with your PIN, to access your account.

Another scam involves a device coined a "Lebanese Loop" that is made of a sleeve of metal or plastic (or even a strip of videocassette tape) that is installed in the ATM card slot. When you insert your card, the loop prevents the machine from reading your card. Thieves then watch from a distance as you try to punch in your PIN (a practice called "shoulder surfing") or a "friendly" bystander (aka the crook) offers help by suggesting your re-enter your PIN, giving him or her the opportunity to observe up close. When you leave, having assumed the ATM has wrongfully eaten your card, the thief removes the trapped card from the loop and uses it to withdraw your funds.

Keeping your money safe
While thieves employ various high-tech means to crack into your account, there are several low-tech ways to help keep your money safe. "The best thing that consumers can do is protect their PIN by shielding it as they enter the numbers," says Romano. Even when thieves have possession of your original debit card or a cloned copy, if they don’t have your PIN, your information is safe.

Here are some additional tips to protect yourself and your bank account:

• Review your bank account statements on a regular basis. Report any unusual activity (such as incorrect or missing transactions) to your financial institution immediately.

• Keep your debit card in a safe place and never lend it to anyone, including friends or family members.

• Your PIN is your electronic signature. Memorize it -- never write it down.

• When you select your PIN, don'’t pick obvious numbers such as your phone number or date of birth.

• Never disclose your PIN to anyone. No legitimate member of your financial institution, the police or a merchant will ask you for your PIN.

• While using an ATM, make sure no one is lingering around you while you enter your PIN.

• After completing a transaction, remember to take your card and transaction record.

• If you suspect anything unusual about an ATM (such as loose parts around the card slot that could be part of a card-trapping device), do not use the machine and notify the bank immediately.

• If your card is lost or stolen, notify your financial institution immediately. If you card is retained by an ATM, try to remain at the machine and let a bank representative come to you.

If it happens to you
If you suspect you're a victim of ATM fraud, report the incident to your financial institution immediately then call the police to make a report. The Canadian Code of Practice for Consumer Debit Card Services protects consumers from losses resulting from circumstances beyond their control, such as losses resulting from forged cards or theft.

However, you may be held liable if your financial institution determines that you contributed to the unauthorized use of your card by compromising its security features by writing the PIN number on the back or on a piece of paper nearby or by selecting an easily guessable PIN using your date of birth or Social Insurance Number. So, be sure to pick a number no one else will guess and always be alert when using an ATM.

Fiona Wagner is a writer based in Georgetown, Ont.