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What is ATM Skimming?

A type of fraud occurs when an ATM is compromised by a skimming device, a card reader which can be disguised to look like a part of the machine. The card reader saves the users’ card number and pin code, which is then replicated into a counterfeit copy for theft. Bank ATMs and payment terminals at gas pumps and other merchants are the targets of this scam. Thieves then use the stolen information to produce fake cards and spend victims’ money or take cash straight from their bank accounts.

“If they are able to retrieve the card number itself, it’s common to use those in online marketplaces or to sell the card numbers in batches to other criminal groups who may attempt to use them for fraudulent purchases,” says Nathan Wenzler, chief cybersecurity strategist at Tenable, a cybersecurity firm in Columbia, Maryland. Also, wireless technology enables hackers to retrieve stolen PINs and other card data “without approaching the ATM ever again, making it very difficult to catch them in the act,” Wenzler says.

In 2008, more than $1 billion was stolen in ATM-related crimes [source: ADT]. Sure, some thieves take the old-fashioned route and crack them right open, but there’s a much quieter, high-tech form of theft targeting ATMs. It’s called skimming.

ATM skimming is like identity theft for debit cards: Thieves use hidden electronics to steal the personal information stored on your card and record your PIN number to access all that hard-earned cash in your account.

ATM skimming Methods

Hackers employ several techniques to steal data that’s embedded in the magnetic stripe on credit and debit cards:

A plastic overlay placed over the ATM keypad captures PINs as they are entered.
An overlay placed over the card insertion slot records the data on the magnetic stripe.
Tiny cameras placed on an ATM record keypad entries and your fingers as you type.
An overlay that covers the whole ATM faceplate is embedded with cameras and card-slot and keypad overlays.