Beware of ATM Skimming

One of our readers sent us a story about how he got scammed in New York City by so called ATM Skimming. Fortunately for him, his bank had a good fraud detection system in place. They called him within 5 hours of his first use of Debit card at the NYC ATM machine. They called to check if he had made purchases worth $1700 at 3 different stores. They cancelled the debit card immediately & issued him a new one.

The Scheme

Fraudsters have started working in groups, targeting hundreds of debit-card holders in a systematic fashion. Here's how they execute ... They begin by using plaster or clay to make a molding of the front of an ATM. Then they build a plastic facade, "sanded down and spray-painted to match the machine so that it is virtually undetectable," says the FBI's DeLeo. In one recent case, the crooks' add-on had signs on it showing how to insert a card, an improvement over the actual ATM in terms of user-friendliness. (funny, yeah?)

The facade is used to hide a magnetic-card reader, which can be purchased online. Typically, a video camera is concealed in a light fixture or brochure holder overlooking the keypad, although occasionally the device used to capture the PINs is not a camera but a fake key panel overlaid on the real pad.

The crooks return couple of hours later to retrieve the camera and the card-reading device. They download the captured ATM-card numbers from the device, match each with a personal identification number recorded by the camera. Then they encode stacks of magnetically striped plastic cards with the stolen information. With these cards in hand, the thieves could go to ATMs and merrily withdraw thousands of dollars from the accounts of unsuspecting victims.


A quick search on Google revealed that this menace is becoming widespread and costs the US banks close to $1B (yes billion!) every year. The loss to the banks is due to the fact that they have to reimburse defrauded customers. From a customer's perspective he/she may feel covered, so why bother? Well, the banks have to pass on the cost to someone. Guess who has to lift the burden - the consumer, ofcourse! At the end of the day it is the consumer (and in some cases, the shareholder) who have to pay for this theft in the form of fees (or lower share value).

Tips to help guard your debit cards

Here are some tips as they appeared in a Times article.
1. Kick the tires: Thieves put well-disguised facades on ATMs to conceal skimming devices, so steer clear of any cash dispensers that have visible glue marks. Check for loose parts by tugging on the card-reading slot.

2. Protect your PIN: Use one hand to shield the other as you type in your PIN. The bad guys typically obtain your PIN by installing a video camera in the light fixture above the keypad.

3. Be extra cautious at malls, airports and gas stations: Getting cash or paying by debit card in these high-traffic venues can make you vulnerable to skimmers because the machines there may be more easily tampered with than bank ATMs.

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