How well is your financial institution protecting you from growing ATM frauds?
Don’t know? You should ask. Turns out financial institutions now have the technology to thwart even the most innovative ATM scam artists.
Yet, surprisingly, many institutions have only lately started using the technology, said Overland Park security expert Mark J. Tomasic.
Some still don’t, said Tomasic, security director for StoreFinancial, an electronic payment processor that handles gift card programs for more then 360 shopping centers throughout North America and the United Kingdom.
Recent news accounts describe how con artists have used e-mails, phone calls and text messages to con hundreds of consumers into giving them their banking account numbers and PINs — which is like handing over your house keys.
The scammers made phony ATM cards, complete with magnetic stripes embedded with a victim’s personal banking data. Using a PIN, the thieves could access their accounts from anywhere in the world.
The con artists convinced naive consumers their accounts were suspended and could only be reopened by providing personal information. It wasn’t smart of consumers to give out their information in the first place.
But the scams won’t work against financial institutions that are prepared.
Turns out also embedded in the magnetic stripe on the back of every legitimate credit, debit and ATM card is a hidden logarithm called a CVV, which stands for Card Verification Value.
The CVV is transmitted with every transaction. That means any institution can require its ATM network processor to verify every ATM card transaction.
And if the CVV doesn’t match, the transaction won’t go through and the fraud is stopped in its tracks.
In fact, Tomasic said, someone could give out all his personal information, PIN included, and a fraudster could attempt to use a fake card, “and it would be declined for ‘invalid CVV.’ ”
So why don’t all banks, credit unions and other financial institutions use this ATM technology that’s already available?
Actually, financial institutions have been using the technology for years with credit cards, debit cards and transactions at stores and other retail establishments.
Indeed, a big advantage of using plastic is that you are protected from fraudulent transactions. In most cases, you won’t lose more than $50 if your card is used without your permission.
But ATMs are a more recent invention, and seemed less susceptible to fraud. So many institutions let them slide. But that changed in the last two years as ATM fraud spiked, Tomasic said.
Tomasic knows this personally from working at banks, where he tracked frauds. He recalls one bank that lost $4 million in one month to fraudsters. But, he said, when the bank started requiring its ATM network to verify the transactions, the frauds stopped. And the customers were reimbursed.
Carl Bradbury, senior vice president at Commerce Bank, said his bank began using the technology several years ago and it has “cut that sort of PIN-based fraud off at the knees — it’s a powerful tool against the bad guy.”
Bradbury points out that banks will never ask customers to disclose their PINs in the first place. If asked to do that, you can be sure you’re dealing with scam artists.
So how can you find out if you’re protected?
Tomasic said the best way is to simply ask your bank. “All cards are bank products, and from my perspective the onus is on your bank to protect you,” he said
That applies, he said, even if you are conned or give out your PIN inadvertently. If your bank won’t tell you, he said, you have the option to take your business to one that does.
Debunking myths
You may have heard the one about how personal information gets embedded on a cardkey when you check into a hotel with a credit card — allowing a dishonest employee to steal your identity.
“No, I guarantee it’s not true,” Tomasic said.
“There isn’t any personal information put on a cardkey,” he said.
He said another urban myth that won’t go away claims “that if you are being robbed at an ATM or forced to withdraw money, you can enter your PIN number backwards and the police will be alerted.
“That’s also not true,” he said
By PAUL WENSKE
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