Foley says some thieves place an out-of-order sign on a working ATM that directs traffic to their nearby bogus ATM.
"Or worse, they put up a machine that says, 'We will clean the mag stripe on your debit cards. Just insert it here and it will improve the transaction process,'" says Foley. "What you're plugging it into is a skimmer."
Whatever the scam, the result is the same: It's become increasingly hard to tell a safe ATM from a bogus one.
Banks and financial institutions generally cover cardholder losses in some -- but by no means all -- fraud cases with their much-ballyhooed "zero liability" promise.
|Smart ways to avoid ATM fraud|
|Always safeguard your information by following these steps when using an ATM:|
|•||Maintain a safe distance from others in line. Do not allow anyone to distract you or offer assistance.|
|•||Have your card out of your purse or wallet and ready for use.|
|•||If you see anything suspicious, use a credit card instead of a debit card at an ATM. That way, there's no PIN entry that could give thieves access to your checking account and you'll have zero liability (or the federal maximum liability of $50) in the event of fraud. However, cash advance fees are typically very high, so this move is inadvisable if you carry a credit card balance from month to month.|
|•||Stand close to the screen and shield your keystrokes from cameras and others waiting in line by using the knuckle of your middle finger to key in your PIN.|
|•||If you feel the ATM is not working properly, press cancel, remove your card and report the machine to your financial institution.|
|•||Secure your cash and card, and make sure the transaction is complete and the screen is clear before leaving the ATM.|
|•||Keep your printed receipt to compare against your bank statement.|
However, at some point those losses land back on consumers in the form of higher bank fees and product costs.
Litan says the recent increase in attacks now has banks reassessing their traditional view of ATM/debit fraud as an acceptable business loss.
"I think that's changing; I don't think it's so acceptable to them now," she says. "Their (anti-fraud) systems are out of date. The neural networks only catch the second (fraudulent) transaction, not the first. They've been eating a lot of losses and having to reissue cards. They're not happy about it. I don't think it's acceptable like it used to be."
Johnson says the American Bankers Association is working with its member banks, ATM vendors and networks to shore up ATM security.
One promising area, known as "jitter technology," would enable the ATM itself to detect when it has been tampered with and to shut itself down. ATM maker Diebold has unveiled its Vectra line that replaces the keypad with a dial, making it more difficult for thieves to obtain PIN information.