Article

The key to ending skimming: A comprehensive approach

It's vital for the ATM industry to take a more holistic approach to tackling skimmers in order to combat criminals' evolving tactics; at the center of this approach will be contactless access.

June 3, 2016

by Dena Hamilton, general manager, director of enterprise fraud and security software solutions, NCR Corp.

Skimming is still the most common form of ATM attack, but it's not just limited to the ATM. As it takes advantage of inherent weaknesses in magnetic stripe cards, skimmers can be used at any location where a user needs to swipe their card, from POS terminals to fuel pumps.

Skimming is a  lucrative strategy for criminals, as well. A single attack can result in material losses of up to $50,000, with global cumulative losses set to exceed $3 billion this year.

Criminals view skimming as a low-risk, high-reward tactic that gives them a range of options for exploiting cards. Once the card and PIN data has been captured, they can either make counterfeit cards or use the information online for card-not-present fraud.

A growing problem in the US

Card skimming is a particularly big problem in the U.S., where fraudsters are increasingly targeting nonbank ATMs. These locations are viewed as more vulnerable to ATM skimming as they may not have the same level of attention paid to them. For instance, convenience stores have become a popular target for fraudsters as their ATMs may be in partially hidden locations that can offer fraudsters greater freedom.

Another area that's particularly vulnerable is gas stations. For instance, according to the Michigan Department of Agriculture — which is responsible for inspecting the state's gas stations — the use of skimmers at these locations has exploded. Craig VanBuren, director of the consumer protection section of the body, said, "It's crazy. What we're finding since August has just really blown our mind."

Police in New York have seen reports of skimming quadruple as skimming devices become smaller, less obtrusive and cheaper for criminals to purchase.

Of course, it's not just the U.S. that is at risk of card skimming. Banks around the world have to be aware of the evolving tactics used by fraudsters to collect card data.

For instance, new forms of skimmers are emerging that can be placed in positions that avoid ATM anti-skimming devices, and criminals are now trying new methods to get the card data at the internal card reader, or by tapping into network connections.

A more comprehensive solution

For these reasons, it's vital for the industry to take a more holistic approach to tackling skimmers in order to combat criminals' evolving tactics.

For starters, anti-skimming solutions need to provide the ability to detect the use of skimmers inside the card reader. These solutions can be enhanced with the use of jamming technology, which provides an additional way to defeat the criminal skimming device.

Making physical changes to ATMs to improve the protection of the fascia is also important, in order to prevent any efforts to cut into a machine and attach devices to its internal card reader.

In the longer term, the best way to tackle the skimmers is to end the use of the magnetic stripe altogether through the wider use of contactless solutions. This technology has already been deployed at the POS in some markets, and it is beginning to work its way into ATMs, as well.

But for a contactless approach to succeed, banks, ATM manufacturers and merchants will have to work together in order to roll out the technology and get consumers on board with it.

Together, all of these solutions will provide great benefits for all parties: Not only will they dramatically reduce skimming incidents, but they'll also make transactions at both the ATM and POS faster, which is good news for everybody.

Dena Hamilton is general manager and director of enterprise fraud and security software solutions at NCR Corp. She has more than30 years experience in the financial services sector, including seven years in the card and payment processing space and more than 20 years within the software industry specializing in fraud, risk, compliance and security solutions.

This article was reposted frombanking.com

photo istock