ATM / Kiosk: FBI releases details of recent ATM skimming cases

Last autumn, two brothers from Bulgaria were charged in U.S. federal court in New York with using stolen bank account information to defraud two banks of more than USD1 million.

Their scheme involved installing surreptitious surveillance equipment on New York City ATMs that allowed them to record customers’ account information and PINs, create their own bank cards and steal from customer accounts.

What these two did is called “ATM skimming”—basically placing an electronic device on an ATM that scoops information from a bank card’s magnetic strip whenever a customer uses the machine. ATM skimming is a growing criminal activity that some experts believe costs U.S. banks hundreds of millions of dollars annually.

How skimming works

The devices planted on ATMs are usually undetectable by users—the makers of this equipment have become very adept at creating them, often from plastic or plaster, so that they blend into the ATM’s façade. The specific device used is often a realistic-looking card reader placed over the factory-installed card reader. Customers insert their ATM card into what is, in fact, a second reader and their account info is swiped and stored on an attached recording device, perhaps a notebook computer or cell phone, or sent wirelessly to the criminals waiting nearby.

But getting the card data is only part of the task for some criminals. They also want the PIN so they can, themselves, use the card in an ATM - the quickest route to cash.

So skimming typically also involves the use of a hidden camera, installed on or near an ATM, to record customers’ entry of their PINs into the ATM’s keypad.

At the FBI, we have also seen instances where, instead of a hidden camera, criminals attach a duplicate keypad on top of the real keypad. The duplicate records every keystroke as customers tap in their PINs.

Skimming devices are installed for short periods of time - often just a few hours - so they’re often attached to an ATM by nothing more than double-sided tape. They are then removed by the criminals, who download the stolen account information and encode it onto blank cards. The cards are used to make withdrawals from victims’ accounts at other ATMs or, in the case of simple data theft, to make unauthorised purchases, often over the internet. Indeed, one of the most serious uses of stolen credit card data is for criminals to set up internet domains which are used in e.g. phishing scams or other internet frauds.

Skimming investigations

Because of its financial jurisdiction, a large number of ATM skimming cases are investigated by the U.S. Secret Service. But through FBI investigative experience, the FBI has learned that ATM skimming is a favourite activity of Eurasian crime groups, so we sometimes investigate skimming - often partnering with the Secret Service - as part of larger organised crime cases.

Some recent case examples:

In Miami, four Romanians were charged with fraud and identity theft after they made and placed skimming devices on ATMs throughout four Florida counties … all four men eventually pleaded guilty.

In Atlanta, two Romanians were charged and pleaded guilty to being part of a criminal crew that stole account information from nearly 400 bank customers through the use of skimming equipment they installed on ATMs in the Atlanta metro area.

In Chicago, a Serbian national was arrested - and eventually pleaded guilty - for attempting to purchase an ATM skimming device, hoping to steal information from ATM users and loot their bank accounts.

In New York, a Bulgarian national referenced at the top of this story was sentenced yesterday to 21 months in prison for his role in a scheme that used sophisticated skimming devices on ATMs to steal over USd1.8 million from at least 1,400 customer accounts at New York City area banks.

One last note: ATMs aren’t the only target of skimmer- The FBI has also seen it at gas pumps and other point-of-sale locations where customers swipe their cards and enter their PIN.

Source: FBI HQ. Additional reporting: Silkscreen Consulting, www.countermoneylaundering.com