Skimming Off the Top: Crime's Easy Target

Skimming Off the Top: Crime's Easy Target - top government contractors - best government contracting eventSkimming is a big business. Internationally, 40 million Euros are scammed each year through ATM scamming, and domestically the numbers are  just as high. Worldwide $8.5 billion is lost from consumers and credit card companies.

Skimming attacks almost always happen in the same way. Criminals paste a fake card reader over the actual reader. A PIN entry capture device, either a camera or fake PIN pad placed over the actual PIN pad, record the bank customers PIN. The resulting data (magnetic strip information and PIN) are then recorded, often in a cell phone, and wirelessly transmitted to a computer or laptop near the bogus ATM. Once criminals have both magnetic strip data and the PIN withdraws are made. Without the PIN, the magnetic card data is useless. For this crime, both data sets are needed.

Most withdraws happen over the weekend, when banks are slower to react and charges take longer to process.

Part of the appeal of skimming crime is the cost to the criminals. The technology and devices needed are extremely effective and hold a very low cost. Most are manufactured by the skimmers and some are purchased legally from localities such as China. Internationally, skimmers are particularly active in Turkey, Lebanon and South Africa and in major tourist centers.

Skimming crime is  hard for police and officials to catch. Most people caught in association with this crime are the low level criminals who are assigned to attaching devices to the machines.  Much is not known about the depth and structure of skimming organizations. “They’re not idiots or drug-addled junkies trying to get $20. They’re consummate businessmen. They adjust for the last countermeasure that we put in place. We build the wall higher, but they keep coming back with taller ladders,” said Detective Pedro Palenzuela, a detective from Palm Beach County responsible for cyber crime.

Banks hold the burden for this type of crime. If you suspect that you have been a victim of this crime, notify the bank immediately. They will need you to report the crime to the police and then monitor your account. Banks often replace the money stolen. Most police internationally shrug at this crime and write a report knowing that the perpetrators will not be caught. The recent successes in catching skimming rings in Romania and Bulgaria were a luck exception. Law enforcement does not know much about the skimmer criminal.

Germany has been having significant problems with skimming attacks. Last year 18,000 Germans were victim to these robberies. German banks are taking action to protect their customers.

EMV technology replaces the need for magnetic strip banking. Each card that bears a magnetic strip is replaced with a processor ship holding the same information as the magnetic strip. Named for the three largest credit card companies in the world, Europay, Mastercard and  Visa, companies are working fast to develop international standards for this technology.

Germany is taking this technology a step further. By 2011, all ATMs will use EMV rather than magnetic strip technology. The switch to EMV machines does hold significant cost to banks, but they are willing to make a step for security. This more secure platform is a major step by German banks, and they hope that customers will also take steps towards safety. Even with current magnetic strip machines simple safety steps such as covering you hand while entering PIN, checking for wobbly parts, wholes and additions especially around the card slots and by avoiding free standing machines.

Banks in Germany hope that if they take the first step, customers take more precautions and develop better practices. Domestically, EMV technology is most often seen in transit-fare collection systems. Earlier this month, at the 3rd Annual Smart Card Payment Summit, scholars and researchers see the wide-spread acceptance of automatic transit fare will lead to better acceptance of Smart Card technology. Experts at the conference also urged banks to offer EMV cards to customers that often travel abroad, as more countries, not just Germany transition to EMV only machines. Contactless cards have also found mild success in gas stations.

Most of the world is adopting this technology and the United States is falling behind. “Once the world moves to EMV, the card companies have said they will get rid of the mag-stripe,” said Caroline Walpole, a smart card expert in the United Kingdom  “But until everybody in the world is ready, we can’t lose the mag-stripe.”

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