ATM fraud goes up in the US

This issues addresses in large part to nonbank-owned ATMs, which accounted for 60% of ATM fraud in 2015, compared to 39% in 2014.

Most ATM fraud occurs through ‘skimming’, a process in which criminals install an illegal card-reading device inside of ATMs to steal card numbers and record keypad entries to get PIN numbers, and then duplicate cards for sale and use.

Debit fraud is a major factor in the increase in overall ATM fraud. People typically access ATMs with their debit cards, which have much higher rates of fraud than in the past. In the first quarter of 2015, 30% of all merchant fraud loss stemmed from debit cards, compared to 16% in the same period in 2014.

This occurred because debit cards have been slower to integrate chips than credit cards. Estimates say up to 75% of US credit cards upgraded to chips by the end of 2015, compared to 25% of debit cards.

Security upgrades are ongoing, but nonbank ATMs will likely remain vulnerable. Some ATM manufacturers are integrating biometrics, such as Diebolds ATM called Irving, which uses mobile phones and retina scans rather than cards. US banks, including Chase and Bank of America, are considering cardless, phone-based ATMs at their branches as early as the end of this year. These steps could help reduce bank-based ATM fraud, but they do not mitigate the risk at nonbank ATMs, which is where criminals focus their efforts.