Risk & Fraud

Commercialization of Fraud on the Rise – Casting a Wider Net of Cybercriminals

By: David Ver Eecke, Sr. Fraud Product Manager, PSCU

There’s a new kind of fraudster out to steal credit union members’ financial information – and they may not even possess the electronics expertise or computer savviness of a typical cybercriminal. In fact, they can be anyone.

Modern technology has made it easy for anyone to become a fraudster. Skimming devices, in particular, are becoming more widely available on the dark web for the average criminal to buy. The thieves discreetly place these fake card readers on point-of-sale (POS) machines, most commonly ATMs and gas station pumps, to steal credit and debit card numbers, PIN numbers and other account data from unassuming consumers when they use their cards.

Experienced fraudsters are manufacturing these skimming devices and selling them on the black market. They’re also providing free and searchable online access to forums, video tutorials and other instructional guides to entice others to use these devices, as well as advice on how to commit fraud online (such as spamming) and circumvent security measures.

Skimming devices have also become more inconspicuous and accommodating for capturing card data. Many of them are smaller in size and can be mounted in various positions on ATMs and gas pump machines, and can even fit inside the card reader. They also contain less metal parts and a larger memory, as well as lithium batteries for extended recording times. Additionally, they have wireless Bluetooth or mobile capabilities. This means that the fraudster can simply download the stolen data from the device and does not need to return to retrieve the equipment. Wireless technology keeps the fraudster out of sight from security cameras and reduces the risk of getting caught.

Often, skimming crimes go unsolved, because of the lack of video surveillance and the time it takes to investigate these cases – not to mention the proliferation of this crime, which has law enforcement spread thin working on a large number of these incidents.

What Can Your Credit Union Do to Stay Ahead of Skimmers?

It is important to keep your credit union staff and members aware and informed about the increase in card skimming crimes. Help your staff understand that skimming doesn’t take the expertise it once did for a cyber-criminal to pull off a successful event, and that there are many how-to guides and equipment available and accessible on the internet for the motivated and studious fraudster.

Encourage your credit union members to check card acceptor devices at gas stations and ATMs. These are hotspots for skimming devices. Taking a few quick seconds to survey the gas pump or ATM is a good practice before using your card. Look for anything that seems out of place or may be loose. You can also check the security seal on the gas pump to see if it’s been tampered with recently. Additionally, fraudsters will often target remote ATMs or gas pumps as there may not be great surveillance in these areas. Encouraging your members to check card terminals and report anything suspicious to store employees and local authorities can go a long way in preventing a skimming event.

It’s also a good idea to use ATMs located at financial institutions. Most credit unions have procedures in place to check ATMs for skimming devices on a regular basis. Private ATMs in gas stations or on the street may not be inspected regularly – and that’s what criminals are counting on.

As with any type of fraud, a multi-layered approach to preparedness, detection and responsiveness will help to prevent and mitigate loss and maintain member satisfaction.

David Ver Eecke is a Senior Fraud Product Manager at PSCU. David knows that the cooperative nature of credit unions provides a unique advantage when it comes to stopping fraud. When he isn’t working on products to increase payment security for credit unions and wage war against fraudsters, he finds time to write about topics on risk and fraud. David has worked in the financial services industry focusing on fraud and risk for over seven years.