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ATMIA East: Big on security

Fraud prevention was the focus of this year's ATMIA Conference East. And with an appearance from Frank Abagnale and a slate of security-focused presentations, this year's event pulled a nearly record crowd.

March 8, 2006 by Tracy Kitten — Editor, AMC

Click here to view the ATMIA East slide show.

The weather was less than Florida-like the first part of the week. But for the 560 ATMIA Conference East attendees who made their way to Walt Disney World's posh Swan hotel last week, the trek was well worth the effort.

Orlando, Fla., was host to the ATM Industry Association's seventh-annual East event - a conference that honed in on security from all angles.

A keynote from Frank Abagnale, the real-life fraudster depicted in Steven Spielberg's "Catch Me if You Can," and an opening address from New York State Police investigator Kevin Sullivan set the stage.

Frank Abagnale delivered the keynote address at ATMIA's awards banquet.

Abagnale, who's spent the last three decades working with the Federal Bureau of Investigations, is a recognized expert in the areas of identity theft, fraud and forgery. He also now works with Discover Network, helping Discover reduce its own risk and liability through consumer and customer education.

During a standing-room-only address Friday, Abagnale described the ease with which criminals defraud companies through stolen identities and simple scams. His insight was entertaining -and a bit frightening - as it highlighted how often consumers and companies make valuable information available for general consumption.

Frank Abagnale's presentation Feb. 17 was packed, with only standing room left for late attendees.

When the information is easy to find and duplicate, thieves use it to their advantage. "So why do you continue to give your information away?" he asked.

That was a chord Abagnale carried from his keynote the night before when he candidly spoke about his life on the run, a life he embarked upon at the ripe age of 16. With a matter-of-fact tone, Abagnale explained how a kid from Bronx, New York, turned into one of the FBI's most wanted, almost overnight.

Like Abagnale, Sullivan also is a self-educated fraud expert. After learning a few years ago how easy it was to get into the ATM game, Sullivan, a former narcotics cop, began his own ATM crime-fighting crusade.

Sullivan now works closely with financial institutions, educating them about fraud-protection and liability.

During his opening address Thursday, Sullivan talked about fraud in a more ATM-centric way, paying special attention to money laundering. He encouraged deployers to approach financial fraud from a Six Sigma approach, by understanding how all financial channels, including the ATM, fit together.

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"Who is monitoring the transactions at the ATM?" Sullivan asked. "And once you're monitoring them, are you looking at the right information; and are you telling the police or the proper authorities about suspicious transactions?"

It all sounds quite a bit easier than it is in practice. But with the looming enforcement of mandates and regulations, including the USA Patriot Act, Sullivan stressed the importance of a multichannel, inter-FI perspective.

Fair Isaac Corp. technology operations director Michael Urban and Celent LLC analyst Madhavi Mantha echoed Sullivan's perspective.

Sprinkled in between Abagnale's and Sullivan's presentations were multichannel risk management and strategy analyses from Urban and Mantha, all of which leaned toward security, fraud and breaches.

According to information collected by Fair Isaac, U.S. PIN fraud is on the rise, Urban said. From 2001 to 2003, debit card fraud doubled. And from '03 to 2004, it doubled again.

By 2005, approximately 62,000 compromised debit cards had been identified in the United States.

Mantha said the demand for more secure transactions is a given.

The networks are addressing security from a variety of angles, including Triple DES.

Visa's new Plus network operator agreement rules, whose first effects hit in November, are expected to tighten up the independent-sales-organization business by virtue of their existence. At least that's the way Marilyn Kilcrease, president of Temecula, Calif.-based Creative Card Solutions LLC, sees it. (Read also, Compliance with new Plus rules requires long-term investment, planning.)

"If you have a criminal or someone with derogatory information (on file), you have to get rid of them," Kilcrease said. "If, when you're doing your checks, you find someone that has a problem, you have to get the ATM out of there. That's your responsibility under these new rules."

As they did at ATMIA West in September, select EFT network members reviewed ISO regs, such as Plus' agreement rules, in a changing ATM world. The topic has yet to grow stale, since the next due-diligence deadline for all existing ATM owners is November 2006. (ISOs and FIs were required by Nov. 1, 2005, to have up-to-date records for all newly placed off-premise machines.)

Regardless of how long ago an ISO sold an ATM to a merchant, the ISO is still responsible for maintaining up-to-date files.

"The problem is that this has been a loosely guarded industry for a long time," said Kathie Taylor of First Data's Star network. "But as the networks work more to know who their customers are, you're going to see less and less problems. There are going to be less of those people out there who operate ATMs and have criminal and derogatory information on file about them."

In case you thought it was safe to stop talking (and thinking) Triple DES, think again.

From right are Tom Riley of Project First, Anita Kelly of DPL Group, and Michele Jean and Ryan Pickering from Canadian ISO Newer Technologies Ltd. at the ISO reception Feb. 16.

Like the due diligence required by the new agreement rules, Visa and MasterCard pushed Triple DES as a way to reduce security breaches. Although deadlines have been pushed, industry experts say processors are really starting to pull for compliance.

"Over the last three months, we have really seen Triple DES upgrades pick up," said Wayne Vandekraak, president and chief executive of Beaverton, Ore.-based Solvport LLC. "We are currently upgrading 10,000 units (for ISOs), and I'd say we get a call at least every two weeks about more upgrades. We think the processors are finally putting the heat on, and it's working."

John Del Giudice of Atlanta-based processor RBS Lynk agreed that Triple DES is still a hot topic. "I definitely don't think it's a dead issue. We've been talking about it for a long time, but we are really pushing the Triple DES issue. And we're going to keep getting the word out that it's a mandate - a requirement -so that we can work with ISOs on a compliance migration plan."

On the exhibit floor, the show's 51 exhibitors didn't show off anything too new or different.

For the most part, the technology reflected tech showcased at similar shows, such as November's Bank Administration Institute's Retail Delivery Conference & Expo. And like BAI, wireless tech was definitely abuzz.

Kent Phillips, vice president of self-service solutions for Frisco, Texas-based Transaction Network Services Inc., said he expects the presence of wireless ATMs in the U.S. to hit about 5,000 over the next six months.

The tech is catching on, and so is the interest.

Doug Johnson uses Bancard's 'Franklin' ATM.

"We had a lot of interest at this show," Phillips said. "This is the best (ATMIA) we've had by far. … I think this will be a big year for wireless." (Read also, CDS signs with ATMLink for wireless ATM connectivity.)

Other vendors, like Columbia Falls, Mont.-based Triton distributor Bancard Systems, expressed similar satisfaction with the show and its ISO attendees. Others praised ATMIA for successfully breaking the conference into two tracks -one for FIs, one for ISOs -an undertaking conference organizers spearheaded last year. (Read also, Systech, CDS announce IP-based ATM services.)

Triton president Brian Kett said this year's event "was the best ATMIA trade show and conference that the ATMIA has ever put on. I think the venue, the speakers, and the trade show were all first class."

"We had a great deal of interest in both of our new products: the 8100, with the new TDM 50 mechanism that was specifically designed for merchant-replenished locations, was a huge hit at our booth with all the North American ISOs," he added. "As well, there continues to be growing interest in our retail-designed RT2000 TTW unit and the newest member of our line-up, the full function FT7000 TTW, which made its debut in Beijing late last year at the CIFTEE show."

In addition to TNS, wireless tech was a highlight at Bancard's and Systech Corp.'s booths, to name a couple. While San Diego-based Systech showed off an inexpensive router-like solution that converts a dial-up ATM connection to IP, Bancard showed off built-in wireless connectivity that it's taking to the street for temporary placements.

"There's no spoofing," said Bancard's Todd Donnella. "This is built-in wireless on a Triton machine."

Bancard's towering Ben Franklin unit, a weatherized ATM enclosure, was a floor-stopper. Even ATMmarketplace had to stop in and take a peek.

ATMIA CEO Mike Lee also was recognized for his contribution to ATMIA and the industry during the awards banquet Feb. 16.

An aisle or two down from Bancard was Portland, Ore.-based Vero Inc., a financial-services technology provider that announced its partnership with Fremont, Calif.-based Tranax Technologies Inc.for a check-cashing solution during the show. (Read also, Vero, Tranax join forces to provide self-service check-cashing solution.)

The new kiosk, which is expected to hit the market later this year, is a multifunction ATM built by Tranax that runs Vero's proprietary fraud engine for check cashing.

Reaching unbanked consumers in the retail and FI space is an expected focus for both companies in the coming year.

The U.S. is a planned target, but so are neighboring countries like Mexico, other show attendees said.

In 2006, the presence of U.S. companies in Mexico is expected to show substantial increase, said Jorge Fernandez, president of Level Four Americas LLC. "Interchange has decreased in Mexico over the last two years. Now, with surcharging being implemented and allowed, we will probably see some growth."

One hang-up in Mexico: the ATM registration cost for ISOs. In Latin America, under the current model, an ISO pays about $25,000 to register each of its ATMs. "That's because the networks don't differentiate between FI and ISO ATMs -at least not at the moment," Fernandez said.

Other vendors like De La Rue, La Gard and Kaba Mas showed off their usual respective wares - notes and media dispensers and electronic locks.

But Carson, Calif.-based MagTek, a 30-year-old supplier in the card-reader space, showcased something a little different – its MagnePrint magnetic-stripe reader. The MagnePrint pulls more data, reading not only tracks 1, 2 and 3, but also the status, serial number and transaction counter of the reader itself.

"Card compromise could happen at many different locations, so you need to have logical security that will allow you to determine if the card is real or false. The mag-stripe is like a fingerprint -a true authentication process," said MagTek's Kiran Gandhi.

Awards

Shown above are ATMIA's award winners for 2005. From left, back, are Mike Urban of Fair Isaac, Martin Lewis of APACS, and Mike Hudson and Brian Bailey of NCR. From right, front, are Sandra Hartfield of PDNB, Bill Jackson of Triton and Adrie Rossouw and Stefane Elizabeth Haupt of First National Bank in Johannesburg, South Africa.

And finally, drum roll please, the awards. This year's Conference East marked the first at which awards were given. (Read also, ATMIA announces industry award winners.)

The presentation was reportedly well-received: This year's banquet pulled more attendees than any held previously, ATMIA CEO Mike Lee said.

The winners:

• Triton Systems vice president of engineering and development Bill Jackson received the prestigious Lyle Elias Lifetime Achievement Award. "It is truly an honor to be recognized by ATMIA and my peers," Jackson said. "This award is also a tribute to everyone at Triton who has been part of our success over the past 25 years." (Read also, Triton's Jackson receives ATMIA's Lifetime Achievement Award.)
• NCR Corp. earned the Best ATM Technology Award in the hardware and security categories. Mike Hudson, general manager of NCR EasyPoint ATM LLC (formerly Tidel Engineering) and Brian Bailey, NCR's global marketing director, accepted the awards. "We are very excited to be acknowledged by ATMIA for the work we do on behalf of NCR customers and the ATM industry. NCR is committed to developing technology that helps maintain consumer trust in the self-service channel, while ensuring that we deliver solutions that drive business-led results."
• First National Bank (South Africa) won the Best ATM Technology Award in the software category for using its ATMs as sales and communications tools.
• Mike Urban, technology operations director for Fair Isaac Corp.'s CardAlert Fraud Manager, received the Global ATM Security Alliance's Crime Fighter of the Year Award. "This is a tremendous honor for me, and I would not have won this award without the incredible efforts of the men and women of Fair Isaac CardAlert Fraud Manager who manage counterfeit PIN-based card fraud every day," Urban said.
• Martin Lewis, manager of card payments for London's Association for Payment Clearing Services and chairman of the United Kingdom's ATM Crime Group, took the Best Contribution to the Industry Award in the individual category.
• And Palm Desert National Bank's president of electronic banking, Sandra Hartfield, who also serves as chairwoman of ATMIA, earned the Most Influential Member Award.

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The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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