EFT Association, Secret Service, want to keep ahead of a possible ATM fraud problem

ARLINGTON, Va. – The Electronic Funds Transfer Association (EFTA) hosted a meeting in Washington on July 24 designed to establish an industry-wide task force aimed at confronting what the association and U.S. Secret Service said could be a rising ATM fraud problem. Kurt Helwig, executive director of the Electronic Funds Transfer Association (EFTA) said that neither his association, nor the Secret Service, wants to unnecessarily scare the industry about the problem, which Helwig called “high tech skimming.” But they also want financial institutions, including credit unions, to be ahead of the fraud and ready should it start to develop. According to Helwig, “high tech skimming” is the practice of using a so-called “parasitic” electronic device to steal ATM card numbers and Personal Identification Numbers (PINs) from unsuspecting customers and financial institutions. Helwig differentiated between “high tech skimming” which, he called a “relatively new phenomenon” and traditional means of stealing the cards and the PINs that have been largely addressed. Ten years ago thieves would use binoculars to peer over the shoulders of people who were punching in their PINs, Helwig described. Then they would match those numbers to the card numbers they would retrieve from discarded receipts. Banks and merchants thwarted that practice by only printing the last five digits of a card number on a receipt and by educating users not to discard receipts near the ATM, he explained. But now thieves have gone “high tech” in that they have started using electronic means to get the numbers through a couple of strategies. The first is a device called a “wedge” through which a clerk at an over-the-counter point of sale transaction surreptitiously swipes the customer’s card and then notes the PIN. The second is a type of wedge that is placed within an ATM machine or door access control to capture the card number and, in the case of the ATM machine, the PIN as well. The problem of clerks swiping cards through a “wedge” has already become a significant problem in Europe, Helwig said, and the parasitic device problem came to the attention of the EFTA and the Secret Service after a man the Secret Service said has ties to the Russian mafia actually purchased and placed modified ATMs in order to capture card numbers and PINs. The fraud ring was uncovered when the multiple withdrawals on some cards triggered the New York Cash Exchange’s (NYCE) fraud alarms. The Secret Service will not comment at all on the case but Helwig stressed that it was unusual and that it represented what the association believed is the “cutting edge” of the ATM fraud technology. Helwig said the Task Force’s agenda had not been set and that the association’s goal at this stage was to make sure that all parts of the industry were represented. Previously, the Secret Service, which has the responsibility within the U.S. Treasury Department to address cases of financial fraud by wire or electronic means, has identified a lack of common fraud and other precautionary procedures among ATM manufacturers, processors and deployers as being a significant weakness in the system. Helwig said the association, with its 700 members drawn from across the industry, is well positioned to help the industry organize to confront the threat. [email protected]