We all know it's important to be smart about how and where we use our credit, debit or ATM cards but the bad news is, crooks have figured out ways to steal your financial information without those cards ever leaving your hands. In part two of a special TODAY three part series called “Scam-Proof Your Life with Sid Kirchheimer,” the author who writes the Scam-Alert column for the A-A-R-P Bulletin offers tips to keep thieves out of your bank account.
Over just six days in October 2005, at least 700 residents of the Winston-Salem, N.C., area learned that money was stolen from their bank accounts after they had withdrawn cash from two local automated teller machines. “We had more than $3,000 taken," recalls one victim, who discovered her checking account was dry when she tried to transfer funds into her son’s college fund. "The bank didn't have a clue until I contacted them. They didn't believe me at first—until they realized the funds were going to Russia.”She, like thousands of other Americans, fell victim to ATM skimming, a scam that generates losses of $50 million a year, according to a recent study by the Electronic Funds Transfer Association. EFTA president Kurt Helwig says skimming scams represent a mere fraction of the $1 trillion that goes through the nation’s 400,000 ATMs each year. But, if you’re among the millions of Americans who regularly use these machines to get quick cash or do other transactions, understand that all it takes is a scammer with some technical savvy and readily available products to empty your bank account within minutes. “Over a 15-minute period, six withdrawals totaling $4,500 were made from my account," notes one skimming victim, who lives in New Hampshire. “From one ATM machine, they made one withdrawal after another…until my account was emptied.”
How skimming works
Most often, a small, portable card-reading device — similar to those used to make credit— and debit-card purchases in stores — is placed over the mouth of an ATM to create an unobtrusive false front. Sometimes, this “card reader” or “skimmer” is installed over the card slot that opens a door to gain entrance to the ATM. The bad guys rig the door open to fool customers into thinking all is well: The skimmer cannot unlock the entrance door, but captures the card data. These skimmers, available on the Internet for as little as $70, read and store information encoded in the magnetic strip of debit cards. Often, a miniature “spy” camera — also available on the Web or at specialty shops — is covertly mounted nearby to tape customers entering their PIN access codes, or a transparent sheet is placed over the ATM keyboard to record PINs. When you stick your debit card in the ATM for a withdrawal, you get your cash…and the reader collects data from the magnetic strip on the card. The skimmer and camera are later retrieved — perhaps to be installed at other ATMs. Or it may remain in place with a wireless connection to an offsite computer. The scammer then produces duplicate cards, which are sold on the black market (with access PINs supplied), often overseas, to make fraudulent withdrawals from your account. Rip-off Tip-off Although skimming devices can be hard to detect, be suspicious of often-used ATMs that suddenly sport new equipment protruding from the slot card. Avoid using machines bearing signs denoting “new equipment” or prompting you to use an adjacent ATM. These are common ruses to fool customers—especially if the sign has spelling errors. (This scam is often pulled by Russian organized-crime members, say officials). Beware of repairmen or customers loitering near an ATM, especially when they offer advice on the machine.
Banks will usually reimburse victims of ATM skimming, but it may take several weeks. To protect yourself from a skimming scam:
- Cover your hand whenever you punch in your PIN; this will reduce the chance of scammers recording your PIN via a hidden camera.
- If you’re using an ATM in usually secured areas — such as in a bank kiosk after hours — check the door before inserting your debit card into the slot to open the door. If your card usually must be used to unlock the door, but you notice it is unlocked (without having to use the card), it could indicate that the door was rigged to remain open — and have a skimming device collect your card info.
- If your debit card can also be used as a credit card — it will have a Visa or MasterCard logo — ask your bank to issue you a “debit only” card. This helps block the risk of fraudulent online credit transactions if your card information is skimmed.
- Request your bank to set a per—day ATM withdrawal limit on your account. Unless you make this specific request, most banks have per-transaction of, say, $200. Skimming scammers easily avert that by making several consecutive withdrawals.
- Keep close tabs on your day—to—day account activity, and immediately report any fraudulent or suspicious withdrawals. Some banks require that customers report missing money within 60 days from its occurrence or discovery in order to have it reimbursed.
Skimming scams can also occur at card swipers in convenience stores, supermarkets, gas stations or other businesses. In March, four men were arrested after they were caught placing skimming devices at checkout card readers at Stop & Shop supermarkets in Rhode Island and Massachusetts to steal data on more than 1,000 credit or debit cards. Customers at those six stores have already reported more than $68,000 in fraudulent transactions on their accounts; that figure is expected to grow. As with bank statements, carefully review your credit card bill each month. If you spot fraudulent charges, your credit card company will likely close your existing account and issue you a new card with a different number. By law, you are liable for only $50 in fraudulent charges, and most issuers will waive that fee – especially if you quickly report bogus buys on your plastic.
Adapted from "Scam-Proof Your Life" by Sid Kirchheimer. Copyright © 2006 Sid Kirchheimer. Adapted by permission of AARP Books/. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.