ATM crime is increasing

Doug Johnson, a vice president and the senior adviser of risk management policy for the American Bankers Association, acknowledges that ATM skimming may be getting worse.

A skimmer is a device that reads and records all the account information stored electronically on the magnetic strip of an ATM card. Fraudsters have returned to ATMs in force as a favorite fishing hole for that prize catch: your debit card. With a little light mechanical tampering, thieves can “harvest” your account details and PIN number in seconds, then use them to either produce a “clone” card or to simply shop online until your account runs dry. With debit fraud, the thief actually drains the money directly from a checking account, leaving the victim to deal with bounced checks, missed payments and a downward-spiraling credit report while fighting with the bank to correct the wrong.

Litan predicts the ultimate solution to ATM/debit fraud may involve the chip-enabled “smart card,” which is more difficult to clone. The chip in a smart card is combined with the user’s PIN — a system known as “chip and PIN” — to verify transactions as nonfraudulent.