- The Washington Times - Monday, May 10, 2004

Q I keep hearing about ATM fraud. How serious a problem is it? And what can I do to protect myself?

A: Simply put, ATM fraud involves unauthorized withdrawals of money from a bank account via automated teller machines.

In recent years, criminals have become increasingly sophisticated. They don’t even need to steal an actual ATM card to clean out an account. Instead, they can modify an ATM to skim the personal data electronically encoded on a card when it is used.

“Generally, skimming is the placing of a parasitic device onto the ATM’s card reader that enables the download and transmission of information that you swipe. This usually works in conjunction with a hidden camera to watch you enter your PIN” or personal identification number, said Kurt Helwig, executive director of the Electronic Funds Transfer Association. “Then the thief goes and manufactures a bunch of false cards and uses them and the PIN.”

Thieves can also use what’s called “shoulder surfing,” which involves someone looking over your shoulder while you enter your PIN at an ATM.

Mr. Helwig estimates financial institutions lose roughly $50 million a year to ATM fraud — a fraction of the $1 trillion a year dispensed annually from ATMs.

The good news for consumers, he said, is that the law limits the liability of ATM fraud victims to $50. That means financial institutions and specialized companies that operate cash machines have to reimburse fraud victims for any loss above $50.

“Whether it’s an ATM card transaction or debit-card transaction, you’re protected,” Mr. Helwig said.

ATM makers are working on technologies to prevent theft, but it pays to be cautious.

Sometimes, the fraud is so clever that consumers can’t tell anything is wrong, said Ann All, editor of ATMmarketplace.com, an online industry trade publication. In other situations, there are red flags — such as one case where thieves used a handwritten sign instructing patrons to swipe their card in what turned out to be a bogus card reader.

“Your best bet is to just look at the machine,” she said. “If something looks odd to you or not right, it’s probably best not to use the machine at all, or to call your financial institution or the telephone number that is posted on the machine and let them know.”

It’s a good idea to make sure no one is standing too close when you type in a PIN and to be suspicious of someone who seems too helpful. Thieves have been known to jam one ATM machine and then direct consumers to another, where a skimmer has been installed.


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