savings

Skimming the cash out of your account

Experts say crime rings sometimes skim ATMs, and the damage can be extensive. A New York ring installed more than 20 modified ATMs and compromised more than 26,000 transactions and thousands of cards from 1,400 issuers. Losses were pegged at $3.5 million before the case was cracked.

There are approximately 360,000 ATMs nationwide. About half of them belong to banks, and the rest are so-called "nonbank" ATMs in convenience stores, malls, hotel lobbies, airports, etc.

ATMs that have swipe readers (you swipe your card through a raised slot) are the easiest to skim. Swipe readers are more likely to be found at nonbank ATMs.

"Most ATM manufacturers are aggressively moving away from swipe to a dip or manual insert reader that has less accessible external parts because the reader head is buried in the machine," say Jim Merrell of Ohio-based ATM manufacturer Diebold.

But that doesn't mean you should avoid ATMs that have swipe readers.

"There are tens of thousands of them. Just beware of something that doesn't look quite right," says Merrell.

More ATMs, more victims
The fact that there are so many ATMs contributes to the skimming problem. In a way, we've become victims of the convenience we demand.

"The notion of 24-hour access," says Evans. "It used to be that the ATM was through the wall of the bank branch. They'd monitor it and know if anything was wrong. Now there are ATMs everywhere in unattended locations. Bad guys have options they didn't used to have."

The ATM skimming task force that Kurt Helwig's organization, the EFTA, is leading is bringing together all segments of the ATM industry -- manufacturers, processors and financial institutions, as well as the U.S. Secret Service, which is involved in ATM skimming investigations.

"We want to stay ahead of this as an industry," says Helwig. "We're looking at where the system is vulnerable. Our goal is an industry-wide solution."

The task force will be looking at a number of ways to combat skimming, including the design of ATMs and magnetic stripe technology.

Evans says a technology called Jitter is one way to beat skimming.

"A skimming device needs a nice, smooth card reader. Jitter varies the speed and reverses the direction of the card intermittently and in a random fashion when the card is entered."

Jitter is being deployed mainly on newer, motorized card readers.

Implementing technology changes will be a massive job, but task force members say the situation will be much worse if consumers lose faith in the system.

"Card-based purchases -- online, debit and credit -- are so convenient for the consumer and are the lion's share of commerce in the developed world," says Evans.

"We can't take this lightly. The industry has to make sure that cards are well protected and that consumers don't hesitate to use them. If there's any hesitation at all -- this store doesn't look right or this ATM doesn't look right -- then there's a very real risk that card usage will decline dramatically."

If you are a skimming victim, your bank should refund all of the money that was lost.

"We regret any inconvenience to our customers who become victims of fraudulent activity in their accounts," says Bank of America spokeswoman Lisa Gagnon.

"Bank of America protects its customers against fraud in many ways, which includes our commitment to assume 100-percent responsibility for the cost of the fraud for customers who have unauthorized activity on their ATM or check card,"

Here are some tips to help you avoid becoming a skimming victim:

Keep your PIN safe. Don't give it to anyone.

Watch out for people who try to "help" you at an ATM.

Look at the ATM before using it. If it doesn't look right, don't use it.

If an ATM has any unusual signage, don't use it. No bank would hang a sign that says, "Swipe your ATM here before inserting it in the card reader" or something to that effect.

If your card is not returned after the transaction or after pressing cancel, immediately contact the institution that issued it.

Check your statements to be sure there are no unusual withdrawals.

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