Skimmers & PIN Based Fraud

Melanie Ortiz

Melanie Ortiz

With technology playing a big role in fraud, it is the credit union’s duty to try to combat fraud to the best of our ability. With Fraud Prevention, Breach Alerts, and EMV Chip Cards, specific types of fraud trends have decreased. However, technology is ever evolving and thieves are continuously finding ways around the security measures that financial institutions and merchants have put in place.

The most recent increase of fraud seems to be the outcome of skimmers.

Skimmers are devices that can be placed both inside and outside a terminal (card machine) to collect data once a card is swiped. Basically how it works is, the skimmer is placed on/inside a terminal for a period of time collecting data as it is being used. Once the information is obtained, a counterfeit card is made, and used to make purchases.

Skimmers are most commonly founds at gas pump terminals, and ATM machines; two of the most used machines, that are also usually isolated enough to tamper with without being noticed.

The use of PIN numbers being entered during gas pump purchases is increasing the loss per cardholder, and increasing the gain for thieves. If your PIN is entered at the time of the skimmed transaction, that information has also been obtained. Because your PIN (PERSONAL Identification Number) is supposed to be known to you only, thieves are able to move around more discretely making purchases. The PIN number also allows thieves to check your account balance at an ATM, as well at withdraw funds. This is where the effects of skimming are becoming catastrophic.

Fraud patterns show that fraud activity with counterfeit cards typically occur on the weekends while financial institutions are closed. This gives thieves an extra day or two to go undetected and continue to conduct transactions. While you may be able to close the card once fraud is discovered, you are left waiting for the next open business day to try to recover your funds. Electronic payments, checks, loan payments are all affected at that point, causing NSF or return check fees.

In order to protect your account, it is highly recommended that during gas pump transactions, to avoid using your PIN. Instead, opt for credit and use your zip code only, or go inside and pay with the cashier. Be observant while using ATM machines. Look around at it to see if anything looks tampered with. A wiggle to the card insert can help detect outside skimmers, but will not be able to detect one placed inside the terminal.

Because skimmers are becoming more sophisticated, it is becoming more difficult to identify them. If you do use an outside pump terminal, it is better to give out as little information off your transaction as possible. This can help decrease the impact of fraud in the event that it takes place.

We are here to help you as well. We understand the severity of the situation when funds are taken out of your account without your authorization. Provisional credit is given to help you while your claim is being investigated. We do reach out to law enforcement in these cases, so filing a report of ATM fraud can be very helpful in pin pointing where a skimmer was placed or putting a face to a fraudulent withdrawal.