How does ATM fraud happen?

ATM fraud can occur when individuals lose their card, give their card to someone else to use, or when their Personal Identification Number’s confidentiality is compromised. By following these simple guidelines you can greatly reduce your exposure to ATM fraud.

Tips for protecting yourself against ATM fraud

  • Never write your Personal Identification Number (PIN) on your card or in your wallet. Memorize your PIN as soon as possible. Do not reveal your PIN to anyone not authorized to use the account.
  • Never use your date of birth, social security number, license number or street address as a PIN — those are the first numbers a crook will try.
  • Don’t throw away your ATM receipts at the ATM location. Keep them to reconcile your account, then dispose of them properly when you get home.
  • Always be aware of your surroundings when using the ATM. If it is late at night, try to use a machine that is well lit and avoid dark, remote locations.
  • Always make sure to retrieve your ATM card from the machine when the transaction is complete.
  • Be aware of the person behind you. Make sure no one can see you entering your PIN or how much money you withdraw.
  • Review your statement promptly to ensure all transactions are accurate. Report any discrepancies immediately.
  • Destroy old ATM cards immediately after receiving your replacement cards.

ATM Scams

In addition to the types of ATM fraud that most of us are now aware of, there are two new types of fraud that can clean out your account quickly — card withholding and skimming.

Card withholding occurs when your card gets stuck in the ATM, you can’t get it out, and you leave the card in the ATM planning to contact the financial institution the next morning. When you call you find that the card was not stuck in the ATM. What happens is that thieves put a substance into the ATM card slot which will cause your card to stick inside the ATM. They leave the ATM and wait for someone to attempt to use it. They then get in line behind you and try to watch you enter your Personal Identification Number (PIN). This is very common at drive-up ATMs where the user may not be paying attention to other people or cars nearby.

The thieves even go so far as to put up a sign on the ATM stating: “If your card gets stuck, enter your PIN three separate times to retrieve it.” This gives them three tries to watch you enter your PIN. After you leave frustrated, and you’re planning to contact the ATM owner the next morning, they remove your card with a pair of pliers. They can then use your card at other ATMs and Point-of-Sale (POS) terminals.

Skimming is done at businesses that offer Point-of-Sale (POS) devices for you to pay with your ATM card, such as gas stations. The thieves convince an employee to allow them to connect a lap top computer to the POS machine. The lap top is usually stored under the counter where the POS device is located. When you swipe your card in the POS device to make a payment the information on the magnetic strip on your ATM card is copied and loaded onto a disk. Thieves may also install a hidden video camera that records you entering your PIN. They then match the magnetic information to the PIN and access your accounts.

  • Before inserting your ATM card into an ATM inspect the card slot for any residue.
  • If there is residue, don’t use that ATM. If there is a notice on the ATM about entering your PIN several times, don’t use that ATM.
  • Always cover your hand when entering your PIN: if the thieves don’t have your PIN, they can’t access your account.

Actions for Fraud Victims

If you suspect fraud, it is important to act quickly to minimize potential damage and your own liability. It is important to keep a detailed account of conversations you have with authorities and financial institutions.

  • Credit Bureaus. Immediately call the fraud units of the three credit reporting companies — Experian, Equifax and Trans Union. Ask that your account include a statement referencing the possibility of fraud.
  • Creditors. Contact all creditors immediately with whom your name has been used fraudulently — by phone and in writing. Monitor your accounts closely for any further fraudulent activity.
  • Law Enforcement. Report the crime to police with jurisdiction in your case. Provide any documentation that you have collected. Get a copy of your police report. Keep the phone number of your fraud investigator handy and give it to creditors and others who require verification of your case.
  • Financial Institutions. If you have checks stolen or bank accounts set up fraudulently, contact the institution to report the crime. Put stop payments on appropriate outstanding checks. Close your checking and savings accounts and open new accounts. If your ATM card is stolen or compromised, get a new card and PIN. When choosing a PIN, don’t use common numbers like the last four digits of your Social Security number, your date of birth, license number or street address.
  • U.S. Postal Service. Notify the local Postal Inspector if you suspect an identity thief has filed a change of your address with the post office or has used the mail to commit credit or bank fraud.
  • Social Security Administration. Call to report fraudulent use of your Social Security number.
  • Department of Motor Vehicles (DMV). Call to see if another license was issued in your name. Go to your local DMV to request a new number. Also, fill out the DMV’s complaint form to begin the fraud investigation process. Send supporting documents with the completed form to the nearest DMV investigation office. Request a driver’s license number different than your Social Security number if available in your state.
  • Civil Courts. If a civil judgment has been entered in your name for actions taken by your impostor, contact the court where the judgment was entered and report that you are a victim of identity theft. If you are wrongfully prosecuted for criminal charges, contact the state Department of Justice and the FBI.

 

*Javelin Strategy & Research