loading...
PIN pad fraud usually begins with the theft of a device that is then corrupted by the crooks. (Photo Gary Moore)
Police are sounding the alarm over the most recent wave of debit card fraud that’s affected hundreds of people in the Kelowna area, and while the crime may seem high-tech in nature, most of the solutions are surprisingly low-tech.
Debit card fraud was a $105-million business in Canada in 2008, according to statistics provided by Interac, the organization responsible for the national network that facilitates point-of-sale transactions. The $105 million in fraud affected 148,000 cardholders.
One of the hundreds of new cardholders affected locally is Kelowna.com entertainment reporter Holly Miyasaki. While in Las Vegas last week, her BMO account was hit with three fraudulent withdrawals: one for $400, two for $80, plus $4.50 in fees as the crooks apparently didn’t visit one of her bank’s money machines. BMO returned all of the cash to her account, including the service fees.
Miyasaki was told that bank staff had flagged her account for possible fraudulent activity, but could not say at which business her card may have been compromised. Police won’t say either, ostensibly to protect the businesses caught unwittingly in the schemes.
But police have said that the bad guys’ latest modus operandi involves swiping a legitimate PIN pad and replacing it with a phony one – usually stolen – that’s equipped with a card reader to record each card’s information as well as the PIN number attached to it. That data is then retrieved, either wirelessly or by reclaiming the phony pad, and transferred to card blanks, which ATMs accept as the real thing.
At least that’s how Ravinder Sangha thinks it’s done.
He’s the marketing manager for Richmond-based Halo Metrics, a company that assists retailers with loss prevention, including a growing segment devoted to the security of debit machines. While organized crime is usually cited for playing a large role in debit card fraud, the requisite equipment isn’t entirely black market, Sangha said. ”They’re just computer parts, right? They’re not rocket science-type of things.”
Indeed, a quick Google search turns up all sorts of card readers and card blanks for sale online. “There is some level of sophistication to it,” Sangha added. “It’s usually someone who’s fairly organized.”
But stopping the kind of debit card fraud involving phony PIN pads is relatively easy, he continued. Halo Metric’s two most popular remedies are little more than a stick-on seal that identifies if a pad has been tampered with, and a post that affixes the pad to a counter so it can’t be removed. Other solutions include a proximity alarm and having staff check the pad regularly to make sure it hasn’t been swapped for a different model.
A simple mounted post like this one is one of the most effective ways to eliminate PIN pad fraud. (Photo contributed)
Demand for such items has spiked in the past two years, Sangha said, which is probably when the bad guys realized how easy it was to pull off PIN pad fraud. “It was on nobody’s radar from a retailer’s perspective,” he added.
Halo Metrics now deals with major retailers across Canada seeking to prevent the fraud, usually on the down-low to protect consumer confidence.
“Obviously businesses don’t want it publicized or advertised if their equipment has been tampered with,” he noted.
Tina Romano, public relations manager for Interac Association, told Kelowna.com that debit card fraud is a generally rising trend that totalled about $60 million in 2004, and hit an all-time high of $107 million in 2007.
“There are about four billion (debit) transactions that happen in a year, and 99.99 per cent go through problem-free,” she noted. ”But any amount of fraud is a concern to us.”
Romano said it’s hoped that embedding microchips into debit cards – similar to what’s found on many new credit cards – will make it far more difficult to produce counterfeit models. However, while it’s easy enough to roll out the enhanced cards, Interac doesn’t expect the necessary technology to be in place at ATMs until 2012 and until 2015 on point-of-sale terminals.
Sangha said, though, that chip technology has already been compromised in the U.S. and Europe.
“The thieves just get smarter as you go,” he noted. “We strive to stay one step ahead, hopefully more than one step ahead.”
joe@kelowna.com
250-575-4303
Tags: ATM, debit card, fraud, PIN
