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Industry News Study: 10 percent of fraud victims experienced ATM attacks 2010-04-06 Banks grappling with how to prevent customer attrition may want to pay attention to the risks posed by their ATM machines. Ten percent of all fraud victims in the U.S. say they were on the losing end of phony ATM cash withdrawals, according to a recent study by Javelin Strategy and Research. The report is based on interviews with 3,294 consumers. The report adds that 23 of those victims left their primary banking institution as a result of the security breach. Robert Vamosi, a Javelin analyst for fraud and security, says that customer loyalty in banking revolves around risks associated with services like bank ATMs. "U.S. financial institutions should consider this a cautionary tale and learn from it," says Vamosi. "They can reduce their own losses, build consumer trust and slow the exodus of defrauded customers by adopting progressive security technologies, covering ATM PIN losses and educating consumers." The report also says that the numbers of bank account records breaches rose by 15 percent in 2009. It says that fraudsters have become more sophisticated in recent years and may increase their attacks on ATMs in the U.S. as neighboring countries like Canada move to so-called EMV chip cards. The cards protect against the practice of skimming that is used to steal information from ATM machines. Criminals have long used skimming to take consumer pin numbers by installing card readers in existing ATMs and by establishing fake ATMs, the report says. This process involves fitting a magnet reader or a micro camera on an ATM card reader that later transmits the account information to computer nearby. The fraudsters can also manipulate ATM software to pose as consumers wanting to change their PIN and have also been known to concoct schemes to send out false mobile text alerts requesting personal information from bank customers. However, while more than half of financial service consumers use an ATM each month, more than 70 percent of bank customers have some level of trust in their local branch's ATMs, the report says. The report also notes advancements in ATM machinery by ATM makers Diebold, NCR and Wincor-Nixdorf as positive signs for account security. Javelin adds that banks can take several actions to mitigate attacks from ATM fraudsters. Experts suggest banks brand their own security text messaging methods to confirm questionable transactions on their accounts. Other business consultants say banks should invest in biometrics, such as fingerprint recognition software, in order to ensure customer security, according to tech and finance publication Next. The method has been used successfully for passport validation and is used in other developed nations to secure financial transactions. Some experts say that banks should reconfigure their ATM machines to prevent the attachment of a skimming device to a card reader and should regularly inspect machines to make sure they haven't been tampered with. ATM fraud causes up to $1.2 billion in global bank losses, according to ADT Security. The problem is two-fold for banks, as customers that are victims of skimming switch financial institutions about 67 percent of the time. 
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