By : Robert Johnston
August 11, 2015 10:05 AM
ATM fraud remains a major industry problem, affecting consumers and deployers in equal measure. The latest figures from Europe suggest the industry is making headway in the fight against ATM fraud, although there are still some notable areas for improvement. However, ATM crimes continue to rise in other global regions. EAST - the European ATM Security Team - says in its latest report that cases of ATM fraud fell by more than a quarter last year, down 26 percent from 2013 levels from 21,346 incidents to 15,702.
This was in large part due to a massive 95 percent fall in transaction reversal fraud, while the study also noted a 31 percent drop in cash trapping incidents. Nevertheless, it was not all good news. Fewer incidents is good for the ATM industry as it shows machines are harder to crack than ever before, but the larger problem for the banking industry is the cost of the fraud and the shift to new forms of attacks. Losses are actually rising, according to the report, with the cost of ATM fraud up 13 percent. If the crime involves stolen card details, then clearly there is an issue around fraud detection and post-breach responses. But from an ATM standpoint the main problem remains skimming. Card skimming incidents were almost unchanged, down three percent. But international skimming incidents were up 18 percent, with the majority of these occurring in the United States and Asia-Pacific. This highlights the problem we have around EMV - chip cards versus mag stripe cards. Data on an EMV card is stored on the chip and the mag stripe. Without the PIN it’s pretty well useless in most of Europe, where merchant terminals are suitable for chip cards, but as we can see it’s easy for criminals to still use these cards in the US and elsewhere. EMV migration will help, with the liability shift taking place in October and the vast majority of merchant terminals will be EMV ready by 2017. But there is another aspect to chip card technology that could change the way we look at ATM fraud: contactless. Increasingly EMV cards are used for contactless transactions - around a third of all EMV transactions, according to EMVCo. In the ATM world, contactless withdrawals could be the most important change in the fight against skimming. It could even put an end to skimming entirely. Of course, the physical and digital elements of ATMs go hand in hand, so an end to all ATM fraud is unlikely. EAST reported for the first time on ATM malware fraud, such as ‘cash-out’ or ‘jackpotting.’ A total of 51 such incidents were reported in 2014, with losses of $1.3 million. If skimming is ended, we can expect criminals to redirect their efforts elsewhere.