Go to London, take in a West End show, feed the geese in St. James Park — and pay a tax to global criminal gangs.
Thanks to security holes in European ATM machines combined with the security holes in our ATM cards, Americans abroad are prime targets for financial crime.
This summer, I used my ATM card to get 100 pounds — $169 — in London’s Mayfair, one of the world’s richest neighborhoods.
The machine was owned by the Royal Bank of Scotland, a huge bank mostly owned by the British government. True, the ATM was outside and filthy, but nearly all London ATM machines are streetside and filthy.
London’s machines are also heftier than ours. They have to be: Binge-drinkers spill beer and vomit on them every weekend as they get more cash for more drinking.
But that also means extra hardware doesn’t seem suspicious to American eyes.
Two weeks later, someone used “my” ATM card in wrong-side-of-the-tracks East London — once at a downmarket Tesco supermarket, twice at other ATMs, for a total of $340 in an hour.
It’s a simple scam: Attach a “skimming” device to an ATM to collect card data, and place a camera nearby to get PINs. Ten cards: $3,400. A hundred: $34,000. (Priceless, etc.)
This is so common that the police seemed bemused that I filed a crime report. For Americans in London, according to the US Embassy, “ATM fraud . . . has increased significantly over the past few years.”
There’s no good data on how much Americans lose abroad vs. at home. But global payment-card fraud is big business — about $8.7 billion in annual losses for US financial firms, a big part of it “skimmer” fraud, says Darren Hayes of Pace University.
How did this theft get so large-scale?
First, it’s easier for the world’s smartest criminal gangs — Bulgarians, Romanians, some Russians — to get to western Europe, because of geography and liberal migration rules.
Second, American ATM cards are so unsecure you might as well walk around with your ATM number and PIN taped to your head.
Unlike European bank cards, American cards don’t have microchips. This makes them cheaper to make. But, as Hayes notes, it makes them weaker.
A chip card generates a random number after each transaction — something the card must “remember” the next time. Your American card relies on a “dumb” magnetic strip.
You can ask your bank for a chip credit card (although you usually have to pay an annual fee), but not a chip debit card.
It’s so easy to counterfeit strip cards, Hays notes, that “it’s more of a street crime.”
Tim Ryan, cyber-investigations practice leader of the Kroll global-security firm, notes that “the likelihood that an ATM [outside] on the street is comprised is pretty high. . . You can buy these [skimmers] online.”
And the devices are getting smaller. A few years ago, something stuck on an ATM might have seemed obvious. Skimmers now are “so small it’s easy for the human eye to miss” them, the nonprofit European ATM Security Team told American Banker this year.
And when global crooks do counterfeit foreign cards, they’ll likely use the fake cards here. “America is known as the cashing-out point for skimmed cards,” says Hayes.
So where do our stolen billions go? The good news is that the vast majority probably doesn’t go to global terrorism.
Ray Kelly, former police commissioner and now head of risk management at Cushman & Wakefield, says that organized terrorist groups have more efficient ways of making money. (ISIS has kidnappings and oil.) Still, “I don’t think we can rule it out,” he says.
Hayes notes that the terrorists who blew up four trains in Madrid a decade ago had ATM skimmers — and that “extremists” caught in an investigation into London’s Finsbury Park Mosque a few years back had recruited people to use skimmers.
As Giles Mason of the UK Cards Association notes, European-card crime fell 75 percent after 2008, when chip technology become universal there.
And America is getting chip cards over the next half-decade, because fraud costs have finally grown so high financial firms realize it’s worth it.
In the meantime, Americans abroad are more likely to be skimmed, because we’re the easiest targets.
So when you go abroad, remember to cover your hand or change your PIN — so you don’t end up hoping the people who withdrew your money at Tesco in East London were just crooks, not terrorists.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.