ATM Fraud

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					Talking Points about ATM Crime
5 Quick Facts about ATMs There are over 1,5 million ATMs installed worldwide, with a new ATM being installed approximately every 5 minutes, according to estimates by Retail Banking Research Ltd. The ATM is one of the most important technological inventions of the second half of the twentieth century, providing millions of cardholders around the world with convenient 24 X 7 all hours access to their own banked cash near to where they live, work and shop. Various industry bodies help to self-regulate the ATM industry including banking associations, electronic funds transfer associations, network associations and the internationally active ATM Industry Association (ATMIA). Customer security is a key consideration when choosing sites for ATMs. The Global ATM Security Alliance (GASA) (www.globalasa) has published top security tips for cardholders in order to promote sensible card usage at ATMs, as it is a fact that members of the public can play an important role in crime reduction and prevention General Notes about ATM Security Millions of ATM transactions are successfully carried out every day around the world without problems or interference by criminals and fraudsters 1 . The ATM has been used safely for over three decades and has a proud safety and service record over that period. The ATM is arguably the most popular and easy way that consumers access their cash. Wherever there is cash, there is the potential for crime and the ATM is no exception; however, only a tiny fraction of criminal incidents occur at ATMs in comparison to the huge volume of usage at the more than 1,5 million ATMs worldwide 2 . Most of what the press call ATM Fraud is actually PIN Fraud (or Debit Card Fraud), whereby counterfeit cards are used to withdraw cash from ATMs by fraudsters employing PINs compromised at Point of Sales terminals in the retail environment .

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Some industry experts believe that just .0016 percent of all ATM transactions are affected by crime or fraud. APACS in the UK estimates that fraudulent card transactions make up 0.141% of all transactions. 2 There are an estimated 49 billion global ATM cash withdrawals each year. In the last decade, one trillion British pounds was withdrawn from cash machines in the UK (Source: APACS, “The Way We Get Cash”, 2005 report). There are over 14 billion annual cash withdrawals in the US, while ATM fraud is estimated to cost the industry in the US about $60 million yearly. The percentage of total cash cycled through ATMs which is lost to ATM fraud is miniscule, a mere drop in the ocean. In 2004, according to APACS, the UK made 2.53 billion cash withdrawals at cash machines and by far the vast majority of these were incident-free.

10 ATM FAQs (Frequently Asked Questions) 1. What role can cardholders play in reducing ATM crime? A massive role. It is incumbent on consumers to minimise the chances of becoming an innocent victim of fraud. Be aware, be alert and be safe. Cardholders are advised to contact their card-issuing financial institutions should they suspect that they have become the victim of ATM fraud. 2. What are the basic safety procedures cardholders should follow when using ATMs? Answer: Apply the Five “Nevers”: 1. NEVER use an ATM which looks suspicious or if there are suspicious-looking individuals in the vicinity. 2. NEVER accept help from a stranger at an ATM or where carrying out payments. 3. NEVER disclose your PIN to anyone or allow anyone behind you in the queue to watch you entering it (even if somebody claims to be from your bank or the police). 4. NEVER allow yourself to be distracted while carrying out your transaction. 5. NEVER use ATMs which have messages or signs fixed to them indicating that the screen directions have been changed, especially if the message is posted over the card reader. 3. Is anything being done about ATM fraud? The ATM industry is aggressively addressing fraud - few in the industry, let alone in the general public, are aware of the extraordinary efforts being made to fight ATM crime and fraud. Consider the following list of initiatives::
ATM Integrity Task Force - The Electronic Funds Transfer Association (EFTA), in affiliation with ATMIA, is publishing recommendations on PIN security; working with the Secret Service and ATM product and service providers. Global ATM Security Alliance (GASA) - An arm of ATMIA that is organizing international efforts to combat cross-border crime rings. It is working with the Secret Service, Interpol, the Metropolitan Police Flying Squad for New Scotland Yard and major card issuers. In the UK, APACS are co-ordinating a national campaign against ATM crime, with some notable results ATM Security Conferences - ATMIA is educating the ATM industry on the most effective ways to fight ATM crime and presenting awards to those who contribute significantly to the cause. ATM Security Working Group - An organization based in the UK that, among other projects, publishes recommendations for boosting security at freestanding ATMs. (See related story UK's ATM Security Working Group could serve as model for U.S.) Fair Isaac Card Alert - A service that analyzes millions of daily transactions and identifies suspicious activity in near-real time, then sends a list of potentially compromised card numbers to affected financial institutions. This service has been instrumental in solving many fraud cases, including the high-profile skimming case in New York City. Other companies have similar products. Modification to machines by major ATM manufacturers to detect tampering and, in some cases, shut the machine down if fraudulent activity is detected

Security upgrades to machines, including TDES and EPP Certification, to enhance PIN security and encryption, as well as new physical security measures to offer more robust protection to the machine itself The financial industry—ATM manufacturers, ATM networks, financial institutions, processors, service organizations and deployers—continues to look for ways to upgrade the security of ATM operations. This includes hardware design, software, operating procedures and network regulations. A number of companies have developed systems that analyze millions of ATM transactions in real time and identify suspicious activity and have provided key evidence in prosecuting fraud. ATMIA’s Sponsorship Resources Task Force is producing detailed best practices for sponsoring independent deployers onto ATM networks ATMIA, in affiliation with all sectors of the ATM Industry, is creating a resource center for information related to Rules, Regulations and Best Business Practices for the ATM industry

4. Are ATM transactions becoming especially risky? No. All payment systems are subject to fraud. None are totally foolproof. Currency can be stolen or counterfeited. Credit cards can be skimmed and reproduced. Checks can be stolen and cashed, counterfeited, or kited. Also, the consumer is in control of which ATM he or she chooses to use and when. If anything, ATM transactions, like most forms of electronic payments, create an electronic audit trail that can provide valuable information in tracking and prosecuting ATM fraud. Millions of ATM transactions are successfully carried out every day around the world without problems or interference by criminals and fraudsters. 5. But aren’t so-called “off-premise” ATMs or ATMs not located at bank branches more likely to be compromised by fraud than bank branch ATMs? Not at all. First, off-premise, or independently owned ATMs, are subject to the same network rules that govern machines that are owned by banks. Second, in order to be connected through an ATM network, non-bank owners of ATMs must be sponsored by a financial institution. The financial institution is responsible for maintaining the same dependability for those machines as for its own. 6. If ATM fraud has not changed, why is there such an increased focus on it now? What has changed is the nature of ATM fraud. It’s no longer just someone shoulder surfing or robbing a consumer walking away from the machine. Now it may involve elements of organized crime—people who study the industry for years in order to perpetrate a systemic pattern of fraudulent activity. However, this is an industry which for over 30 years has successfully stayed ahead of the “bad guys”. This is a competitive industry. The race for market leadership continues to produce safer machines, more secure software and better operating rules to protect all consumers.

7. How closely does the ATM industry work with law enforcement and fraud prevention groups? Very closely. Law enforcement and fraud prevention groups, including the US Secret Service, the Metropolitan Police Service and the South African Fraud Prevention Service, are part of the Global ATM Security Alliance that is working out strategies for dealing with international ATM crime. In addition, various partnerships have been formed in several countries between the police and industry associations and ATM deployers, such as the ATM Integrity Task Force in the USA and the ATM Security Working Group and the APACS national ATM crime programme in the UK. 8. Is it still safe to use ATMs? Undoubtedly, yes. ATMs remain an extremely safe way of accessing money: • It is safer to carry around a cash card and visit a machine when you need cash rather than carry around large sums of money. If your money is stolen you are unlikely to get it back. If you are unfortunate enough to be a victim of this type of crime you will get your money back from the bank, unless you have acted negligently.

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9. Can Identity Theft be committed through ATMs? No. There is insufficient personal information illegally obtained by fraudsters during ATM fraud to set up false bank accounts or to “prove” personal identity in an impersonation. ATM fraud can involve PIN & Card compromises but cannot provide enough information on the cardholder to enable a fraudster to commit identity theft. 10. What is ATM phishing ? What can be done about it? Phishing is the name given to the practice of sending emails at random, purporting to come from a genuine company operating on the Internet, in an attempt to trick customers of that company into disclosing information at a bogus website operated by fraudsters. These emails usually claim that it is necessary to ‘update’ or ‘verify’ your password and they urge you to click on a link from the email that takes you to the bogus website. Any information entered on the bogus website will be captured by the criminals for their own fraudulent purposes. ATM phishing is when card and PIN compromises happen over internet, usually through an email scam, are used to produce counterfeit cards for fraudulent ATM cash withdrawals. Customers should NEVER disclose their PIN to anyone, whether via email, telephone or verbally. Their PCs should have updated anti-virus software and a firewall installed. Customers should regularly download the latest security updates, known as patches, for their browsers from the Internet. Internet Explorer users can download them from http://windowsupdate.microsoft.com The UK banking industry has launched a one-stop advice site at www.banksafeonline.org.uk to help Internet users protect themselves from online scams and threats. Always be wary of e-mails asking you to click on a link or confirm your details. If in doubt, phone the organisation first. Visit your credit card issuer’s web site for their latest advice on secure online shopping and Verified by Visa and MasterCard SecureCode that enable you to secure your transactions with a password after you have registered.

Acknowledgements

1. 2. 3. 4. 5. 6.

ATMIA Tom Harper, President, NetWorld Alliance Global ATM Security Alliance APACS Martin Lewis, Chairman, ATM Crime Group EFTA

For further information, contact ATMIA’s Mike Lee at mike@atmia.com or Lana Harmelink at lana@atmia.com


				
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