The key challenges posed by card skimming

Card skimming is a fraud type that should be high on the radar of any bank, as it’s one that’s on the rise. 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, they can be used at any location where a user needs to swipe their card, from POS terminals to fuel pumps.

It’s also a very lucrative strategy for criminals. 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 US, where fraudsters are increasingly targeting non-bank 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, Michigan’s Department of Agriculture – which is responsible for inspecting the state’s gas stations –¬†told NBC News that in the second half of 2015, the use of skimmers at these locations has exploded. Craig VanBuren, director of the Consumer Protection Section at the body, said: “It’s crazy. What we’re finding since August has just really blown our mind.”

Elsewhere, 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 US that is at risk of card skimming, and banks around the world will 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, while criminals are now trying new methods to get the card data at the internal card reader, or tapping into network connections.

A more comprehensive solution

Therefore, it’s vital that the industry takes a more holistic approach to tackling skimmers in order to combat their evolving tactics.

For starters, anti-skimming solutions need to provide the ability to detect the use of skimmers in the card reader. This can be enhanced with the use of jamming technology, providing additional ways to defeat the criminal skimming device.

Making physical changes to ATMs to improve the protection of the fascia will also be 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 will be to remove the use of the magnetic stripe altogether, through the wider use of contactless solutions. POS machines that use this technology are already deployed in some markets, and it is also working its way into ATMs.
This will require banks, ATM manufacturers and merchants to work together in order to roll out contactless technology and get consumers on board with it. If achieved, these solutions will provide great benefits for all parties – not only will it dramatically reduce skimming incidents, it will also make transactions at both the ATM and POS faster, so will be good news for everybody.

Written by Dena Hamilton

Dena Hamilton

Dena is NCR's Director of Enterprise Fraud & Security Software Solutions. She specializes in fraud, risk, compliance and security, with over 35 years of experience in the financial services space. Her focus is the development and deployment of enterprise financial crime solutions optimized in prevention, detection and back office efficiency.

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