To combat fraud, ATMs to boost security


June 25, 1993|By ANDREW LECKEY | ANDREW LECKEY,Tribune Media Services

To thwart attempts at fraud, the security at the nation's 87,000 automated teller machines may soon become more high-tech.

For example, Diebold Inc., the largest ATM manufacturer, is studying plans to require an identifying thumbprint. A customer simply puts his thumb on a pad that verifies a digitized pattern in the teller network's memory.

In addition, so-called "smart cards," more sophisticated than existing teller cards because they have a computer chip, would also make it more difficult for criminals to obtain valuable information.

Both concepts are already in use outside the United States but still under development here.

Behind the scramble to make it tougher to steal from teller machines are worrisome recent events. While criminal activity hasn't been significant enough to "break the bank," it has made banks, teller networks and ATM manufacturers realize that breaches of security could lead to some bigger problems down the road.

This spring, criminals planted a bogus automated teller machine in the Buckland Hills shopping mall in Manchester, Conn., and used it to steal $60,000 from various customer bank accounts.

For a week, the crooks used their machine, which took information but didn't give out cash, to obtain customer account numbers and personal identification numbers (PINs), so counterfeit teller cards could be produced. Phony cards were then used to make withdrawals at legitimate teller machines elsewhere.

"We first learned of the scam when one of our small community member banks noticed large and frequent ATM withdrawals on one of their customer's accounts," said Margaret Steves, marketing director with Yankee 24 New England Network, some of whose customers were affected.

"When the customer was contacted, he said the last time he used his card was at the mall, and that the card hadn't worked, so that tipped the authorities to the location of the fraud."

No customer was hurt. While customers hit with ATM fraud are sometimes assessed a $50 charge that covers their full liability on an ATM transaction, none of the banks involved charged their customers the fee.

That was an unusual incident, but other examples of fraud have surfaced.

There also, for example, have been a number of cases in New York and California in which criminals used high-powered video cameras to tape customers as they used their PINs at automated teller machines.

The criminals then gathered the receipt litter that the customers left behind. Next, they created plastic cards by using the information on the receipts, and then tried the various PINs they videotaped, a process that has sometimes succeeded.

"ATM fraud is a very small piece of the financial services-related fraud pie," said Sean Kennedy, president of the Electronic Funds Transfer Association in Herndon, Va., acknowledging that improved technology must play a role in the future.

The American Bankers Association has started working with the individuals and companies that decide placement of ATMs, particularly those at shopping malls.

Henry Mundt, president of the global MasterCard/CIRRUS ATM Network, said its teller systems operate "in a range of 99 percent reliability, and, in the case of the Connecticut scam, there should have been reason to suspect something was wrong when so many people were being denied cash at that one location."

As we wait for technology to solve fraud problems, take precautions now.

When using a machine other than one you usually use, make sure it has the proper identifying logos from the teller network and bank. If you notice anything out of the ordinary, leave immediately. Report unusual occurrences.

Have your ATM card ready and in your hand as you approach the ATM. Don't wait to take it out of your wallet or purse. Make sure that no one can see you entering your PIN. Keep receipts or transaction records with you. Never share your PIN or give it out on the telephone. Immediately report a lost or stolen card to the bank.

& Tribune Media Services

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