There's some good news and bad news to share on the crime front in America. On the plus side, property crime overall continues to fall. Based on the most recent statistics available from the FBI, it dropped -6.3% in 2018, the 16th straight year of decline.
Now for the bad news: ATM crime is up – way up. In fact, it's increased sharply each year since 2016. What can you do to protect your bank's terminals?
"ATM crime rose 60% in 2019."
According to the ATM Industry Association, terminal hacks rose +42% in 2017 compared to the previous year. Fast forward 12 months, they increased again – this time by +54%. What happened in 2019? You guessed it: Machine attacks went up even more – by a whopping +60%.
Like most property crimes, thieves don't always succeed in their attempts. In fact, 81% of stolen money winds up recovered, ATMIA figures show. When it isn't, though, FIs lose out on massive amounts of cash, averaging approximately $57,000 with each incident, according to ATMIA data.
David Tente, executive director for the Americas division at ATMIA, told CNBC that the frequency with which ATM crime occurs is a huge concern.
"We know for a fact that ATM crime and fraud does cost the banking industry and financial services industry billions of dollars per year," Tente explained.
Any time, anywhere
Thieves seem to be increasingly bold in their tactics, to the point of stealing ATMs in their entirety, then tossing it in their getaway vehicles. Whole-ATM theft rose +53% in 2018, while the use of explosives in these attacks soared +23%, ATMIA reported. Perhaps unsurprisingly, standalone ATMs proved to be the most vulnerable, followed by through-wall and drive-thru.
That said, attackers don't necessarily need to be at the terminal in order to exploit it. Positive Technologies found that 85% of ATMs were "poorly secured" against network attacks as well as spoofing. Spoofing is a strategy designed to trick bank, debit and ATM cardholders into revealing the numbers on their cards, whether by phone or email.
However, it's the physical attacks that seem to be occurring with greater regularity, noted Secret Service agent Greg Naranjo, assistant to the special agent in charge in Miami, Florida. He told CNBC that the lengths to which some of these criminals go are incredible. And they can be hard to spot as they're often wearing disguises so they don't appear out of place. The bad guys even try to present themselves as the good guys.
"I've seen surveillance footage of thieves dressed up as actual technicians come up to a department store where the ATM was located right by the front door," Naranjo explained. "And there was pedestrian traffic."
Naranjo added many of these plots involve more than one person. For example, after installing a device onto the machine that enables the first team to hack into the system – which can take a half-hour or more to set up – a follow-up team is right behind them, which then clears out the terminal of all of its cash.
What explains the boom in breaches?
What's causing the surge in ATM crime? Several factors may be at play. One is greater ATM penetration. Since some bank locations are closing or restructuring for the purposes of optimizing efficiency and customer experience, many are increasingly leaning on terminal technology. In short, there are more ATMs in the marketplace and that translates to increased opportunity.
Additionally, the penalties for ATM crime aren't as punitive as other kinds of property crime, according to the ATMIA. There are several different types of ATM fraud (e.g. wire fraud, bank fraud, identity theft, skimming, shimming, larceny) and each state has different laws on the books that dictate how they are prosecuted. Currently, Texas has received the highest number of reports related to ATM theft, ahead of California, Ohio, Pennsylvania and Florida but only 33% of these perpetrators are arrested.
Not only do banks wind up losing money as a result of ATM incidents, customers often wind up on the losing end as well, in the form of higher fees. Fee increases are commonly put in place to defray the costs associated with ATM crime and other ways bad actors bilk banks and consumers, Tente told CNBC.
What's the best way to overcome ATM crime? To prevent it from happening in the first place would be the ideal. While there is no one thing that can eradicate crime, a robust electronic security system can serve as an excellent deterrent. From video surveillance and alarm systems to integration and staging, BranchServ has everything you need and the installation capabilities to defend your FI from property crime. Contact us to learn more.