Bank skimmer fraud creeps into Chattanooga

Bank skimmer fraud creeps into Chattanooga

October 29th, 2011 by Carey O'Neil in Business Around the Region

A fraud scam costing banks hundreds of millions of dollars annually cropped up in the Chattanooga area this month.

U.S. Secret Service agents believe on Oct.13, two men placed devices that record information on bank cards' magnetic strips - a skimmer - over normal Regions Bank ATM card readers in East Ridge and Dalton.

The skimmers also contained small cameras to record customers entering their PIN numbers. That information allows thieves to create fake cards that can be used anywhere cards are accepted.

Foreign Connections

Atanas G. Georgiev, 28, of Atlanta, and Chris Svetlinov Dragiev, 27, of Kennisaw, Ga., were arrested in Nashville on Oct. 19 in connection with the skimming incidents.

Donna Job, resident agent in charge of the Chattanooga Secret Service office, said many card skimmer scams have connections outside the United States. Criminals often move through areas collecting card information from several ATMs, then sell that data or use it to withdraw money from ATMs themselves.

Chattanooga police spokeswoman Jerri Weary said the department has never dealt with any skimming, and Dalton and East Ridge police said these were their first encounter with skimming.

Georgiev and Dragiev were picked up by police in Nashville after Regions Bank officials saw the two covering a Regions ATM camera with a sticky note.

Depositors Covered

It is unclear whether any local accounts were compromised, but police and bank officials recommend anyone worried they could be a victim regularly monitor their accounts.

Most every bank covers consumer losses in fraud cases, so the average victim only has the hassle of filing a claim. There are no specific numbers available, but the growing prevalence of the scam is easily costing banks hundreds of millions of dollars, according to Kurt Helwig, president and chief executive officer of the Electronic Funds Transfer Association which studies skimmers.

"Crime rings who develop these are very diligent and very creative in where they put the devices and how they move them about, and unfortunately they can really wreak havoc," said John Hall, spokesman for the American Bankers Association.

Manhattan Record

In one of the largest skimming cases, four individuals were charged with using card skimmers to steal nearly $2 million with information gleaned from New York ATMs in 2009.

Police and bank industry officials worry this scheme, which is increasingly common in major metropolitan areas such as New York and Atlanta, may be moving to smaller towns.

"It's spread all over," Helwig said. "You'll see situations sometimes where a skimmer will be put in on a machine and it might get $30,000, $40,000, $50,000 or more sometimes before someone picks it up."

Those numbers are huge to individuals, but hundreds of millions of dollars account for just a fraction of yearly ATM transactions. There are about 400,000 ATMs in the United States that dispense roughly $1 trillion into the hands of consumers each year, Hartwig said. That means skimming costs just a fraction of a percent of total transactions.

Convenience Trumps Security

"It's probably growing, but I wouldn't say it's a significant problem," Helwig said.

Of course, no bank likes to lose money, and Helwig said banks will spend millions to combat skimming.

"We watch what kind of attacks are made, new devices, how do they install them, when they install them, duration of instillation," said Bill Burch, head of corporate security for Regions. "We spend a lot of time on anti-skimming technology."

But consumer advocates say banks aren't doing enough. When debit card users lose money to fraud, banks guarantee customers will be reimbursed. But some customers have trouble getting by while they wait for their money to return, said Ed Mierzwinski, consumer program director for the national federation of state public interest research groups.

"Banks make more money when you use your card than they lose from fraud. They look at fraud as a cost of doing business, so they don't do anything to protect consumers. They simply reimburse them begrudgingly after they complain," he said. "They make kabillions of dollars on the transactions. They haven't cared about fraud."

Mierzwinski said banks don't do more to prevent fraud because it would make ATMs less usable. The more a person swipes his card, the more money banks make, so Mierzwinski said the banks are willing to sacrifice security for convenience.

But Hall said everyone he's talked to in the American Bankers Association is concerned with fraud.

"It's always something they're diligent in trying to protect," he said. "I've never met a banker who ever likes losing a penny in fraud."