Fighting ATM fraud
January 3, 2011
As a way to combat debit and credit card skimming in Germany, the German federal police agency (BKA), has announced a dual chip and magnetic strip system for such cards.
In an announcement over the weekend, BKA officials explained that in their design, the magnetic strip will be deactivated before the card is dispatched to the customer. The strip will remain inactive until the cardholder specifically requests otherwise.
"The hope is that criminals will be put off by the idea that they might have to try and read the magnetic strips on twenty cards before they find one that is activated," said Barbara Huebner, a BKA spokeswoman, in an interview with Deutsche Welle.
Debit card skimming crime on the rise
In the first half of last year alone, the BKA reported a massive increase in the number of people falling prey to state-of-the-art theft at 1,000 ATMs up and down the country.
Tiny cameras hidden in what was designed to be protective screening around the number pad filmed almost 2,000 bank customers as they typed in their PIN codes.
Simultaneously, the magnetic strips on the back of their cards were scanned by high-tech reading devices placed over card slots either on the ATMs or on bank doors.
By transferring the data held on the magnetic strip onto a blank credit card and using it in tandem with the stolen PIN, criminals are able to take whatever they want from the accounts they are plundering.
It's a bad situation both for customers and the banks, which largely have to reimburse what was lost.
Worse still, it is also a situation which the BKA says could easily be avoided if banks were to do away with the magnetic strip in favor of chips, which are significantly more difficult to forge.
Dual-card system proposal went nowhere
But there is a complication: while a German-issued credit or EC chip-card would work within Europe, it would pose problems in non-European countries, like the United States, which do not commonly have chip-card infrastructure.
In order to get around that problem, the BKA previously proposed a dual-card system for anyone traveling overseas.
"The original idea was to have one card with a chip and no magnetic strip to be used in Europe," Huebner said, "and a second card with a magnetic strip for use in places like America or Canada."
And although the dawning of 2011 brings with it a new generation of German bank cards which are indeed fitted with chips, they still have the dangerous magnetic strip as well.
As Huebner noted, all the BKA can do is to make the suggestions upon which banks can choose to act as they see fit.
On the matter of the dual-card system, the banks have failed to act at all - possibly because two cards are more costly than one.
Huebner added that this idea has been received with greater interest than its predecessor, but until it becomes standard practice, the authority continues to warn anyone using an ATM to be diligent about covering the number pad with their hand and avoid opening the door to a bank using the same card with which they plan to withdraw cash.
Author: Tamsin Walker (dpa, AFP)
Editor: Cyrus Farivar