Hacked ATMs Lead to 70% Rise in Debit Card Fraud
The latest fraud news from the FICO® Card Alert Service, which monitors hundreds of thousands of ATMs and other readers in the US, is bad. In fact, it’s doubly bad: The number…
The latest fraud news from the FICO® Card Alert Service, which monitors hundreds of thousands of ATMs and other readers in the US, is bad. In fact, it’s doubly bad:
- The number of payment cards compromised at U.S. ATMs and merchants monitored rose 70 percent in 2016.
- The number of hacked card readers at U.S. ATMs, restaurants and merchants rose 30 percent in 2016. This new data follows a 546 percent increase in compromised ATMs from 2014 to 2015.
The average duration of a compromise continued to fall — on average, an ATM or POS device would be compromised for 11 days, compared to 14 days in 2015. The 2016 average duration is less than a third of the average duration in 2014, 36 days. The average number of cards affected by a single compromise was cut in half.
What’s behind this startling rise, which is a new record high? Better skimming devices in more people’s hands. If you really want to hack an ATM, you can get your hands on the tech pretty easily. That means we’ll continue to see compromises - and card fraud - rise.
I’ve been asked whether EMV transition is playing a role here. I think it is, but not the role you’d expect.
As ATMs aren’t yet required to be chip-card enabled, the EMV adoption that came into force last year isn’t driving fraud down yet. Instead, we may be confusing consumers — we tell them not to use machines that look funny or have tape on them, and then the cashier tells them to use a POS device that looks funny and has tape on it. You know, machines that look like this:
That said, if you are looking for tips for your customers, here’s FICO’s advice:
- If an ATM looks odd, or your card doesn’t enter the machine smoothly, consider going somewhere else for your cash.
- Never approach an ATM if anyone is lingering nearby. Never engage in conversations with others around an ATM. Remain in your automobile until other ATM users have left the ATM.
- If your plastic card is captured inside of an ATM, call your card issuer immediately to report it. Sometimes you may think that your card was captured by the ATM when in reality it was later retrieved by a criminal who staged its capture. Either way, you will need to arrange for a replacement card as soon as possible.
- Ask your card issuer for a new card number if you suspect that your payment card may have been compromised at a merchant, restaurant or ATM. It’s important to change both your card number and your PIN whenever you experience a potential theft of your personal information.
- Check your card transactions frequently, using online banking and your monthly statement.
- Ask your card provider if they offer account alert technology that will deliver SMS text communications or emails to you in the event that fraudulent activity is suspected on your payment card.
- Update your address and cell phone information for every card you have, so that you can be reached if there is ever a critical situation that requires your immediate attention.
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I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO<strong>®</strong> Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score.</p> <p><a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a></p> <p>Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li><strong>Credit history.</strong> Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li><strong>New credit.</strong> High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li><strong>Pay on time.</strong> As you might expect, the further in the past the delinquency, the higher the score – and that’s <u>if</u> a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li><strong>Balance and utilization.</strong> Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of <u>available</u> revolving credit utilized. 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It ain’t rocket science!</p>
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