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Identity Theft and the ATM

If an identity thief uses your ATM card or debit card, the federal Electronic Fund Transfer Act provides you with some protection. The amount of your protection, however, is significantly affected by how fast you notify the bank that you have been victimized. The maximum amount for which you can be held responsible for a stolen debit card is $50 if you notify the bank within two business days of learning that your card has been lost or stolen. If you delay notifying your bank more than two business days after discovering that your card has been lost or been used improperly, but within 60 days of receiving a statement showing that the card has been used for an unauthorized transaction, the maximum amount of your personal financial responsibility for the misuse of the card is $500. But if you wait more than 60 days after learning of the unauthorized use, you stand to lose everything that was taken from your account between the end of the 60-day period and the time that you reported your card was missing. It is best to notify your bank by telephone first and then immediately follow up your call with a written notification. A sample notification letter can be found in Chapter 21, “Form Letters.” It is important to note that, regardless of the law, both Visa and MasterCard have taken the consumer-friendly action of limiting their customers’ liability for unauthorized debit card use to $50, regardless of the time it takes the customer to notify the bank.

A Primer on ATM Identity Theft

As bank robber Willie Sutton said, he robbed banks because that is where the money is. That also explains the attraction to identity thieves of automated teller machines. ATMs offer an easy way to use identity theft to steal people’s money. The plain, hard fact is that ATMs are vulnerable. There are a number of ways to steal money through an ATM.

Not all ATMs are owned by banks. Private individuals, who are able to earn significant fees for ATM use by their customers, own many ATMs. To set up a private ATM business, one needs an ATM, sufficient money to stock the machine, and a bank account into which the ATM card user’s bank can send the funds necessary to reimburse the ATM-owning businessman for the money withdrawn and the use fee. There are no government regulations or licensing requirements. The banking industry itself sponsors independent service organizations that control the connecting of the privately owned machines to the bank networks. These independent service organizations, or ISOs, are intended to investigate and approve new private ATM owners, but the oversight is not particularly strong.

The owner of a privately owned ATM can install a mechanism within the machine that takes down and stores the account numbers and personal identification numbers of the people using the machine. The ATM-owning identity thief then just harvests the names, account numbers, and PINs and uses that information to steal money from the bank accounts of unwary victims.

Another scheme involves tampering with legitimate bank-owned and -operated ATMs by installing a thin, phony keypad over the real keypad. This phony keypad records PINs and enables identity thieves to obtain sensitive, personal information without ever having to get at the inner workings of the ATM. The thieves just go back and retrieve their phony keypad whenever they think they have captured enough victims, and then download the information. Then they are off to the races.

A third way that people have their identities stolen at ATMs is through the use of small hidden cameras that look over the shoulders of customers inputting their PINs. The cameras record the PINs, and the identity thieves watch the whole transaction without having to be anywhere near the ATM.

What Can You Do to Protect Yourself from Identity Theft at the ATM?

Automatic teller machines are a great convenience, but they also present a significant risk of identity theft. Here are a few tips you should follow to prevent an ATM from turning into an identity thief’s jackpot paying slot machine:

  1. Avoid privately owned ATMs. Whenever possible, use ATM machines of your own bank. This not only saves you from an increased danger of identity thievery, but also lowers the fees you would otherwise pay for merely accessing your own bank account.
  2. Take a careful look at any ATM you are using for indications that its exterior has been tampered with.
  3. Look around for hidden cameras. Banks themselves will have cameras, but they are generally embedded in the ATM itself.

The Race to Catch an ATM Identity Thief

Due to the daily limits on the maximum amount of money that you can take out of your bank account through an ATM, large-scale rings of identity thieves have to spend a significant amount of time feeding their phony cards, which carry the stolen information, into legitimate ATMs. One New York City ring was busted in 2001 following the complaints of customers who had noticed that their accounts had been raided. Armed with the numbers of the hijacked accounts and a software program that could locate the specific ATM at which a card was being used, law enforcement was ready for the chase. And a chase it was. Rushing to locations in a crowded city like New York City is no simple task. At times, Secret Service agents stuck in traffic literally had to jump out of their cars and run to the ATM locations in order to try to arrive in time to catch their quarry red-handed. But just as con man Professor Harold Hill said early in the play The Music Man, you have to know the territory. And these identity thieves knew the territory. They changed their method of operation to make their ATM withdrawals during the busiest times of the day when both the New York City streets and the sidewalks would be the most congested. And rather than taking the time to use card after compromised card at individual ATMs, the identity thieves kept on the move, using fewer cards at as many as 500 ATM machines. To counter the latest chess moves by the identity thieves, law enforcement began to stake out ATMs that had been the sites of previous fraudulent withdrawals. Then a break finally came. On November 15, 2001, a Citibank employee using ATM withdrawal software noticed that $7,000 had just been withdrawn from a number of different accounts in quick succession at the same ATM. The Secret Service was promptly notified and rushed to the ATM. After a short chase, an arrest was made and the ring was broken.

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