Analysts are saying ATM fraud on the Rise!

California experienced an uptick in card and PIN "skimming" at free-standing and bank-owned ATMs during 2012, according to data released this week.

FICO, a software company that provides credit scores and fraud detection services, released data on Tuesday showing a national uptick in card and PIN skimming, in which thieves steal information using electronic devices, at ATMs during 2012. California, in addition to Florida and the Northeast, was among the hardest hit, the analysis said, especially in Los Angeles, Riverside, San Diego and San Bernardino counties.

Credit card fraud is down in California almost 9 percent, but FICO found skimming to be up, particularly at ATMs, said John Buzzard, product manager for the company's Card Alert Service. The service analyzes 65 percent of ATM transactions across the country each day.

In Southern California, 54 percent of debit card fraud cases analyzed by the company took place at ATMs, with the rest originating at retail point of sale systems. The high amount of traffic at ATMs and the fact that consumers input their PIN is often a draw, he said.

"That makes it the perfect place for a criminal to place skimmers," he said.

Skimmers tend to be nomadic to avoid the extra attention of local law enforcement and consumer awareness, he said, and in recent years criminal activity had moved from California to the East Coast.

"Now we're seeing that migration back to the West again," he said.

Skimming operations can be complex, and several recent cases have had connections to international organized crime, she said. Thieves affix card readers and in some cases keypads over existing equipment that sees large amounts of use. When a customer swipes a card, the skimmer copies the information in the card's magnetic strip.

"All your information is contained within that strip," she said.

The information might then be sold to criminals in another state or outside of the U.S., she said. Its contents can be copied onto a new card, allowing thieves to withdraw cash or run up purchases on credit. Consumers might not notice unusual transactions until months after the initial security compromise, she said. That can make the crimes difficult to track, and the Orange County District Attorney's Office has worked with law enforcement from around the country and internationally in its prosecutions.

Some former street criminals have turned to identity theft over robbery and burglary, she added.

Banks have fraud protections for consumers
Mills stressed that bank customers do not lose money due to ATM fraud.

"Consumers are always protected against unauthorized fraud losses and are refunded by their bank," she said.

Banks have been active in preventing fraud, Henderson said, but when losses do occur, consumers at large pick up the tab with higher fees for bank services.

"They pass that cost along to their customers," she said.

Technology has played a crucial role in detecting fraud. Banks can alert customers immediately after an unusual purchase, and consumers can also monitor their statements online – factors Buzzard said may explain California's drop in credit card fraud. The future of fraud may also lean on technology, he said. Cyber attacks and breeches in retailers' networks can put personal information into the hands of identity thieves on a massive scale. Consumers need to be selective when giving out personal information and to secure their personal computers from viruses, he said.

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