Bank introduces new technology to fight ATM skimming - The Spokesman-Review

Even though ATM skimming has not yet become a major problem in the Northwest, a Seattle-based bank wants to be ahead of the crime wave by rolling out technology that is suppose to protect customers from attacks at the ATM.

“This type of fraud is a growing problem for some institutions,” Mark Mason, CEO and president of HomeStreet Bank, said.

HomeStreet’s answer to ATM skimming is a new feature on the bank’s mobile app called “Cardless Cash.” The feature, which only woirks at HomeStreet ATMs, allows customers to decide how much they want to withdraw before going to an ATM with their mobile device. Once at the machine, they scan a QR code on their phone and the machine will dispense the cash; no cards or pins required.

The process of copying the magnetic strip on a credit or debit card and recording a PIN number is known as ATM skimming. Thieves hide devices inside ATM card readers and use small cameras to get this information and access funds in people’s accounts. Since debit cards and PINs are not used with HomeStreet’s new app, it is expected to stifle ATM skimming attempts.

ATM skimming has consistently been in news headlines for years now, including an example from October of a San Diego man stealing bank information from 13,000 cards in a skimming operation. But banking industry officials say this type of fraud is not as prolific as some might think. Of the nearly 500,000 ATMs in the the U.S., only 1 percent or 2 percent of machines have skimming devices on them, according to ATMIA, a nonprofit trade association representing the industry. A 2017 survey by the National ATM Council found that 1 in 10 retail ATM locations have had a report of a skimming device in use.

As more and more banks change over to EMV chip technology in debit and credit cards, ATM skimming is becoming less of a problem, according to a report by the NAC. Skimmers will not work on chips.

“Data we have seen from other countries indicates increased skimming activity during this migration period,” NAC Executive Director Bruce Renard said. “We are pleased that the vast majority or retail ATMs in the U.S. has remained free from skimming activity thus far.”

In Washington state, the attorney general’s office has not heard of very many ATM skimming allegations, spokeswoman Brionna Aho said.

Federal law protects consumers against unauthorized transactions on their account. But someone has to pay for fraud. According to the 2017 Identity Fraud Study by research firm Javelin, banking fraud cost banks $16 billion in 2016. This is why banks want to be ahead of the curve when it comes to security technology.

In their fight against fraud, financial institutions use a number of technologies to protect their funds. STCU has “multi-factor” security for its online banking accounts. To login to accounts, customers must go through multiple security steps including security questions, text security codes, or security tokens. Horizon Credit Union has partnered with MobiMoney, an app that lets customers to turn their credit and debit cards off and on and limits card usage based on location, merchant preferences, transaction type and amount. Bank of America is one of many banks that offer what it calls “Text Banking,” which lets customers get account information through text messages and without exchanging personal information like full account number, PIN or email address.

Biometrics, blockchain and artificial intelligence are some of the technologies that banks are working on to increase security, according to Faisal Husain, the co-founder and CEO of Synechron, financial services consulting and technology firm.

Mason, HomeStreet Bank CEO since 2010, said no skimming incidents have been reported at HomeStreet Bank ATMs.

He said that just a few years ago, customers were not very interested in fraud, but that has changed.

“People have become more concerned about their own information,” he said.

Mason said this new interest is an opportunity for HomeStreet to attract more customers to use its banking services.

“Banking is a a very generic industry. We all have the same products,” Mason said. “We have to set ourselves apart from other financial institutions.”

One of the ways to do that is to offer new technology that excites customers, such as the cardless cash app.

HomeStreet is also one of the banks to use Zelle, a peer-to-peer payment platform deployed a year ago by more than a dozen financial institutions. It is the banking industry’s answer to apps like Venmo and Square Cash. Zelle’s benefit is that all the money stays in the banking system, Mason said, and it stays secure and insured unlike when people use competing apps.

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