The ATM skimming fraud: how to recognize and prevent it

The Genome team continues explaining the different types of fraudulent financial schemes people can find themselves in when running their day-to-day errands. And what can be more mundane than using an ATM? 

Unfortunately, this is why you can be caught off guard and become a victim of ATM skimming fraud. This article explains how skimming fraud occurs and how you can recognize and avoid ATM skimming.  

What is skimming in banking?

When talking about financial fraud cases, one may be used to thinking that scammers mainly operate online, as it is easier to trick someone who can’t see you. 

However, ATM skimming is different. This type of fraud occurs when malicious actors install a device onto ATMs to steal sensitive data from people’s debit and cards. The device is called an ATM card skimmer, and fraudsters make sure that these malicious instruments are designed to look very similar to the components of real ATMs to misguide bank clients.

And unfortunately, some of their ATM skimming crimes prove to be effective. According to the report published by the European Association of Secure Transactions, in 2022, the losses caused by ATM skimming amounted to €167 million among European ATMs.  

How ATM skimming occurs 

Let’s look at common instruments fraudsters use when skimming bank cards. Understanding this will allow us to recognize such scams better. 

But before diving further, it is important to note that ATM skimming mainly occurs if a person uses a card with a magnetic stripe. You see, all the information necessary to complete financial operations is stored inside this magnetic stripe and remains unchanged.

Meanwhile, cards with EMV chips contain an encrypted code that changes with each transaction. Thus, the information is harder to copy. So, it is safer to have cards with EMV chips and not magnetic stripes. 

Criminals usually try to steal data from bank cards using various card-skimming devices: 

Card skimmer. This device attached to the ATM will read the magnetic stripe from each banking card inserted into the ATM. It will allow fraudsters to collect data and make counterfeit cards to steal money. To prevent this, cardholders should carefully inspect the ATM card slot. If something looks atypical – better not use this ATM. 

Keypad overlay. It is basically a fake keypad overlay placed on top of the original one on an ATM. This type of skimming device is used to collect the PIN codes of each bank card that goes through an ATM.

Hidden camera. It is a small camera which is often installed near the ATM keypad. A hidden camera is meant to record the PIN codes of banking cards while cardholders enter them. You can detect a camera next to the ATM’s keypad – it will look like a small black dot.

In many cases, ATM skimmers will try to apply all these skimming instruments at once to steal the cardholder’s PIN code and make a copy of a bank card.

With the stolen card data and PINs, scammers create counterfeit cards by encoding the stolen information onto blank cards with magnetic stripes. These cards can then be used for unauthorized transactions, including cash withdrawals and purchases.

How to avoid ATM skimming

Here are a couple of things you can pay attention to or do to prevent ATM skimming.

Inspect the card slot and keypad. Skimming devices are often attached on top of the original card reader or PIN pad. Look for parts that seem loose, bulky, or out of place. Additionally, you can touch the keypad to ensure it’s securely attached.

Choose secure locations. ATMs located in well-lit, high-traffic areas are a way to go in a sense of security. Criminals tend to target secluded or dimly lit machines, making them more susceptible to skimming devices. ATMs inside banks or well-established businesses are even safer options.

Cover the keypad when entering the PIN. Sometimes, you can find yourself in a situation with no safe options to withdraw cash. In this case, shield the keypad with your hand or body when entering your Personal Identification Number. This simple act can thwart hidden cameras or onlookers trying to steal your PIN. 

Remember, having your card information without the PIN is often futile for malicious actors.

Regularly check your bank statements. Frequently review your bank statements for any unauthorized transactions. If you notice anything suspicious, contact your bank immediately. The easiest way is to set up an SMS notification to save you time.

Early detection can minimize potential losses due to debit card skimming and prevent further fraudulent activities.

Favor contactless payment methods. Whenever possible, choose contactless payment methods like mobile wallets or contactless cards. These methods use encrypted technology that makes it extremely difficult for fraudsters to intercept your payment information.

Report suspicious ATMs. If you encounter an ATM that seems suspicious or has potential skimming devices, it would be nice if you not just avoid it but report it to the bank or law enforcement. Your vigilance could help prevent others from falling victim to ATM skimming.

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FAQ

What is ATM skimming?

ATM skimming refers to financial fraud when scammers install skimming devices on ATMs. These skimming devices are utilized to steal data from people’s credit or debit cards while using the ATM. Malicious actors will use the obtained information to make counterfeit cards and steal funds.

Are ATM skimmers illegal?

Yes, ATM skimmers are illegal, as they are used for fraudulent activities. 

What are the three types of skimmers?

We described the most common devices utilized for skimming above. These are the card skimming device, a fake keypad overlay, and a hidden camera. 

When did ATM skimming start?

It is hard to tell, as there’s no first clearly documented ATM skimming case. However, it is safe to say that skimming cases became common in the mid-1990s – early 2000s.