Over the last two decades, automated teller machines (ATMs) have become as much a part of the landscape as the phone booths made famous by Superman. As a result of their ubiquity, people casually use these virtual cash dispensers without a second thought. The notion that something could go wrong never crosses their minds.
Unfortunately, things are not always as they seem at the ATM. Most ATM scams involve criminal theft of debit card numbers and personal identification numbers (PINs) from the innocent users of these machines. There are several variations of this confidence scheme, but all involve the unknowing cooperation of the cardholders themselves.
The first step in avoiding these schemes is to become aware of them. Let's explore the most common ways people get ripped off at ATMs. (Thieves aren't the only ones who can drain your bank account. Learn about bank fees and how to avoid them in The Ins And Outs Of Bank Fees.)
1. Every Little Thing It Does Is Magic
The most common scheme begins when a bank customer swipes his or her debit card in the device that opens the door to the ATM vestibule typically found in a bank's inner doorway. Because most people are unaware of precisely what this magnetic reader should look like, criminals can place a counterfeit device that reads and copies card numbers on the outside door without being detected by customers.
Once the customer is inside, a hidden surveillance camera records PINs as customers enter them on the ATM keyboard. The result of this information gathering is the illegal creation of a duplicate card that thieves quickly use to withdraw all the funds in the connected bank accounts as quickly as possible.
Detection of this particular fraud is difficult for the average consumer as there are several dozen manufacturers of legitimate swiping devices. Attempting to distinguish a real one from a fake is almost impossible.
2. Don't Stand So Close to Me
Another method of trickery involves the attachment of a false facade over the ATM machine. Though the machine looks normal, in reality the attachment will "eat" your card and display an error message. Your PIN is usually recorded by a hidden camera, or in some cases, by a "helpful" person standing nearby who suggests that you try to enter your PIN again. Of course, this person is actually a criminal, and moments after you leave, he or she will retrieve your card from the false front of the ATM and walk away with both your card and the access code.
3. Ghosts In the Machines
Freestanding ATMs are also subject to criminal activity. These devices are located in areas as varied as airport terminals and self-service gasoline pumps. In some situations, criminal hackers are able to capture account information by using WiFi scanners and cracking programs to download transaction data when the systems fail to be protected by high-level encryption software. (Not all plastic is created equal — credit cards offer greater protection at the pump. Learn more in Credit, Debit And Charge: Sizing Up The Cards In Your Wallet.)
The most audacious of ATM scams is the installation of machines whose only purpose is to steal information. This criminal confidence scheme was once a popular activity of organized crime circles. Seemingly normal ATMs would be placed in small shops, bars and other venues. The machines were never actually loaded with funds, but instead were there solely to entice users to swipe their cards and enter their PINs. After collecting this information, an error message would appear. These seemingly innocent devices provided criminals with a steady flow of stolen banking information. Because of their placement in high-traffic areas, users did not realize that all users were unsuccessful at withdrawing funds.
4. Making the Best of What's Around
An old-fashioned scam that still reaps profits for criminals is the placement of a deposit receptacle in an ATM vestibule with a sign over the automated machine stating it is out of order. Here, the felon's goal is to capture cash deposits that were intended for the more secure electronic banking machine. While it may seem obvious that depositing money in this insecure fashion is a bad idea, the comfort and trust that people have when entering a financial institution often allows them to suspend their suspicions as they believe that there is no safer place than a bank.
5. Demolition Men
Finally, criminals who are too impatient to go through the complex process of stealing bank accounts and personal identification numbers will simply steal an entire ATM. Typically, this crime occurs in the overnight hours inside a business, such as a supermarket. The thieves will break in, use the store's forklift (which is normally used for the benign purpose of moving cases of beer and soda) to rip the ATM off the floor and load it onto a waiting truck. As a fully loaded ATM can hold as many as 10,000 bills, the total amount of dollars stolen can be in the tens of thousands.
The Bottom Line
Don't let a simple transaction like withdrawing money from an ATM become a way for thieves to get the best of you. To avoid scams like these, listen to the cautionary voices in your head and be careful when something seems amiss. Even in what seem like normal circumstances, shield the keyboard with your other hand when entering your PIN — it's no fun to be driven to tears by a crime you could have prevented. And of course, if you spot a scam in action, don't apprehend the criminals yourself—let the police deal with that.
Is banking new to you? Learn the basics in Your First Checking Account.