Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, August 13, 1993 TAG: 9308130070
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
The latest large-scale ATM fraud was revealed this week when Chemical Bank admitted thieves had emptied $357,000 from its ATMs. Fraud experts said Thursday the case is one of the largest involving bank machines in the United States.
The Chemical case follows the arrest of three people earlier this year on charges they stole $100,000 through a phony ATM they planted in a Connecticut shopping mall.
U.S. banks lost $18 million last year due to ATM fraud, according to the American Bankers Association. But less-exotic bank robbers hauled away $63.4 million from stick-ups, the FBI said.
This new brand of modern-day bank robbers uses knowledge of sophisticated computers to exploit quirks and soft spots in ATM systems, experts say.
In the Chemical Bank fraud, the thieves took advantage of Chemical's merger of its ATM network with machines at the former Manufacturers Hanover Corp., the New York banking company Chemical acquired in late 1991.
Amid merger-related computer problems, the thieves tapped the credit card advance option on the machines for $357,000 between May 11 and May 30.
"I guess that would have to qualify as the biggest cash loss I'm aware of, the biggest ATM fraud in a decade," said F. Barry Schreiber, a criminal justice professor at St. Cloud State University in St. Cloud, Minn. He publishes the ATM Crime and Security Newsletter.
Chemical spokesman John Stefans provided only sketchy details of the fraud, saying the thieves had tapped into nonexistent credit lines.
"Our customers were not affected," Stefans said. "It was the bank's money" lost in the fraud.
The bank's surveillance system for detecting irregular transactions had become backlogged as Manufacturers Hanover ATMs were plugged into Chemical's computer, Stefans said. He said the communications glitch has since been fixed.
Inside jobs are not uncommon in ATM fraud. Last year, a former Citibank ATM security expert was arrested on charges of stealing $200,000 in cash by reprogramming bank machines to leave no record of the transactions.
A ring in Sacramento, Calif., stole about $100,000 from Bank of America's automatic teller network in 1987. They exploited a 20-minute period early in the morning when bank computers didn't verify ATM card pin codes because they were taken off-line from the Interlink ATM network for system maintenance and to tally the day's business.
BofA spokesman Rick Beebe said the bank has since altered its maintenance schedule and shortened its time off-line. The bank said the problem was confined to the Sacramento region and no customer funds were affected.
And in 1988, some $350,000 was stolen from ATMs of the former Security Pacific National Bank in Los Angeles. The thief gained access to a special card available to bank workers and withdrew between $1,100 and $1,200 from 300 accounts over the Veterans Day weekend.
by CNB