Life Rage

Another form of “Life Rage” is taking place right under our noses! Identity theft and debit-card fraud continues to rise as criminals increasingly target automated teller machines to “skim” card information and personal-identification numbers. Previously, most fraud occurred at independent ATMs or at retail points of sale, but this has changed.

In the first six months of 2010, fraud at bank-owned ATMs made up more than 80% of the breaches, according to fraud-detection software provider Fair Isaac. Attacks on retailers are also on the rise, with card numbers, cardholder names, and PINs being skimmed from payment terminals. We have seen a 400% increase in this area in the last five years.

One tactic is a “flash attack,” in which gangs use stolen information to create counterfeit debit cards. The gangs then dispatch cronies to hundreds of ATMs in several cities at once, each withdrawing a small dollar amount that adds up to tens of thousands in losses.

Some skimming devices are able to fit inside ATM card readers and small pinhead-sized cameras record hands punching PINs. To the average person everything appears to be legitimate and the equipment appears secure. Surprisingly, even the banks cannot tell that a machine has been compromised.

Another popular method that skimmers utilize is to place skimmers on outdoor ATMs on Saturday mornings and remove them by Monday morning, passing on the stolen data within hours. Banks are closed during these hours and this affords the criminal plenty of time to illegally operate without detection.

There is new technology being utilized outside of the U.S. Some countries have adopted so-called chip-and-PIN debit cards that have an added layer of protection, but U.S. banks and retailers are hesitant to adopt the technology because of the expense involved. In time, I expect the costs of the upgraded technology to decrease so that the implementation of this new technology will be embraced in the United States.