2011 was transitional year for card and PIN skimming. High-profile PIN points of compromises at a major US craft store chain and a popular Northern California grocery chain brought our focus back to point-of-sale (POS) terminals at retail locations.
Previously in 2010, financial institutions struggled with increases in card skimming at their own ATMs as organized criminals in the Northeastern US targeted bank-owned ATMs spanning from Washington, DC to Rhode Island. It seems that with each spring/summer for the last 3-4 years, there has been at least one significant POS compromise that involves the capture of both payment card and PIN.
The chart above shows how PIN point-of-compromise trends have shifted over the past decade. What's causing this shift?
- Technology is the largest influence of how fraud scams are perpetrated and prevented. Criminals tend to adopt the usage of new technology very quickly so that exploitable weaknesses can be identified during the early adopter phase.
- Publicity is a huge factor in influencing how long a fraud trend sticks around. The more the public knows about a fraud scam, the less likely it will be successful in the long term.
- Higher rates of arrest and prosecution activity by law enforcement quickly forces criminals to change up their game plan by adopting new fraud scams.
- Last but not least, fraud prevention tools, such as FICO® Falcon Fraud Manager, and ATM fraud monitoring services, such as FICO® Card Alert Service, play a critical role in identifying and preventing fraud. Remember: Criminals quickly move on to the next vulnerable institution when they are unable to victimize you.
So what can we expect in 2012? There's a strong probability that some US retailer is already in the midst of an undetected payment card compromise as you are reading this blog post. In addition, financial institutions will likely continue to deal with the recurring risk of card and PIN skimming at the ATM but with less frequency than in 2011. The predicted dips in ATM fraud are largely tied to the fact that law enforcement task forces continue to successfully arrest and prosecute ATM skimming criminals with greater frequency, and increasingly more financial institutions are investing in stronger fraud prevention tools to thwart criminals.