"ATM skimming is one of the fastest growing criminal activities, where the fraudsters place an electronic device on an ATM to scoop every bit of information from a ATM card’s magnetic strip whenever a customer uses the machine"
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| A close-up of an ATM card reader |
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| closer look at the electronics inside of this handmade reader |
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| Hidden pin hole camera - Focusing the keypad |
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| Backside of hidden camera for ATM skimmer |
Skimming is the theft of credit card information used in an otherwise legitimate transaction. It is typically an "inside job" by a dishonest employee of a legitimate merchant. The thief can procure a victim's credit card number using basic methods such as photocopying receipts or more advanced methods such as using a small electronic device (skimmer) to swipe and store hundreds of victims’ credit card numbers. Common scenarios for skimming are restaurants or bars where the skimmer has possession of the victim's credit card out of their immediate view. The thief may also use a small keypad to unobtrusively transcribe the 3 or 4 digit Card Security Code which is not present on the magnetic strip. Call centers are another area where skimming can easily occur.
Instances of skimming have been reported where the perpetrator has put a device over the card slot of an ATM (automated teller machine), which reads the magnetic strip as the user unknowingly passes their card through it. These devices are often used in conjunction with a miniature camera (inconspicuously attached to the ATM) to read the user's at the same time. This method is being used very frequently in many parts of the world, including South America, Argentina Europe, the Netherlands. Another technique used is a keypad overlay that matches up with the buttons of the legitimate keypad below it and presses them when operated, but records or transmits the keylog of the PIN entered by wireless. The device or group of devices illicitly installed on an ATM are also colloquially known as a "skimmer". Recently-made ATMs now often run a picture of what the slot and keypad are supposed to look like as a background, so that consumers can identify foreign devices attached.
Skimming is difficult for the typical cardholder to detect, but given a large enough sample, it is fairly easy for the card issuer to detect. The issuer collects a list of all the cardholders who have complained about fraudulent transactions, and then uses data mining to discover relationships among them and the merchants they use. For example, if many of the cardholders use a particular merchant, that merchant can be directly investigated. Sophisticated algorithms can also search for patterns of fraud. Merchants must ensure the physical security of their terminals, and penalties for merchants can be severe if they are compromised, ranging from large fines by the issuer to complete exclusion from the system, which can be a death blow to businesses such as restaurants where credit card transactions are the norm.
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