Credit unions are calling on stricter criminal penalties and support legislation that increases penalties for ATM attacks. ATM attacks are regarded by the government as property crimes and are not regarded as felonies in many states. The proposed legislation would make ATM attacks a federal crime and carry penalties of up to 20 years in jail.
“This proposed law brings the federal bank robbery statute, first enacted in 1934, into the 21st century, by making any attack or assault upon a person using or servicing any ATM—independent or bank-owned—a violation of that federal act, subject to enforcement and prosecution by agents and officers of our federal government. From the bottom of our hearts, we thank and applaud Reps. Ivey and Rose for their efforts to ensure these much needed federal law enforcement protections are in place for cash access—and for those who load, service and use ATMs across America.”
The Safe Access to Cash Act would provide users, servicers, and owners of nonbank ATMs—a majority of the ATMs in the nation—the same federal protections that are provided to bank-owned ATMs. By doing so, it will allow the small businesses which host these ATMs to have the same level of protection as those located in bank branches. This legislation would additionally grant the Federal Bureau of Investigations authority to investigate these crimes and the U.S. Attorney’s Office the authority to prosecute these crimes.
Card skimming, which is when criminals put small card-reading devices into payment terminals to steal card information, is getting worse. Criminals are ever more sophisticated in stealing card information from unsuspecting Americans. In fact, the number of reported incidents increased by 20% during the first half of 2023 compared to the same period in 2022. And 2022 was one of the worst years yet, according to the credit data firm FICO. Card skimming grew by 368% from 2021 to 2022, and affected more than 161,000 cards and 3,000 financial institutions. The report also found that most of the skimming events happened in a short time frame, making it difficult to detect and stop them.
Historically, compromises were distributed roughly at an 80%/20% ratio, with only 20% occurring at bank locations and the majority taking place at non-bank ATMs like those found in convenience stores and gas stations. However, this year, FICO observed a shift in this distribution, with bank ATMs now accounting for approximately 33% of compromise locations.
Geographically, there are also notable changes in skimming trends. States such as Virginia, Texas, New Jersey, Florida, and Colorado have experienced increases of 50% or more in compromises compared to the previous year. In fact, Virginia and Texas have now entered the top five states with the highest number of compromises. Conversely, California, Washington, and Maryland have seen a decline of 50% or more in compromise incidents.
In recent years, one significant shift has been fraudsters targeting consumers directly, resulting in authorized user fraud or scams. This is also known as authorized push payment fraud (APP fraud) in the UK and elsewhere. Scams have resulted in billions of dollars in direct losses to consumers, with the Federal Trade Commission (FTC) reporting a 30% increase in US consumer losses to scams, reaching $8.8 billion in 2022 compared to 2021.
To counter skimming, credit unions can adopt proactive measures to reduce the risk of compromised cards. A range of solutions were showcased at Diebold Nixdorf’s annual Intersect conference, including an education panel featuring Shanna Palmer, Payments Manager at TwinStar Credit Union. Palmer addressed the increasing physical ATM attacks. One of the credit union ATMs was pulled through a branch wall into a parking lot using a chain, leaving the ATM in the middle of the street. Another ATM was robbed by thieves using a blowtorch to destroy the bolts holding the machine in place.
In response, TwinStar installed burglar alarms on all publicly accessible ATMs and even installed gates around ATMs.
Credit unions are calling on stricter criminal penalties and support legislation that increases penalties for ATM attacks. ATM attacks are regarded by the government as property crimes and are not regarded as felonies in many states. The proposed legislation would make ATM attacks a federal crime and carry penalties of up to 20 years in jail.
While financial institutions can employ monitoring and notification technology to identify vulnerable cards, members also need to be vigilant to protect themselves when using card reader PIN pads, payment terminals, and ATMs, and by watching for any suspicious activity. Instead of swiping their credit or debit cards and exposing the magnetic strip, consumers can opt for more secure methods like chip-and-PIN or contactless technology. Credit unions need to act in real-time to threats and tailor their intervention strategies to help consumers pause and consider before sending funds to potential fraudsters. Using automated, two-way communications through the customer’s preferred channel is another effective tool for introducing sensible safeguards into the payment process.
In conclusion, while no single solution can address all the inventive tactics employed by thieves in various fraud scenarios, adopting a strategic, layered approach can safeguard both customers and banks while enhancing operational efficiency.
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