Debit card skim scam hits Island bank customers
Photo by Ralph Stewart
Paul Falvey, Martha's Vineyard Savings Bank president and chief executive officer, confirmed Wednesday that thieves gained information that allowed them to target approximately 90 debit card accounts and steal close to $100,000 over the Labor Day holiday weekend. Those figures could continue to increase as an internal investigation into the thefts continues.
Mr. Falvey said the thieves managed to gain customer account and pin numbers that they likely used to create fraudulent debit cards. They then used the cards to make withdrawals on Saturday, Sunday, and Monday.
"At this point, it looks like it was confined to New York City, Indianapolis, and Chicago," Mr. Falvey said. "They made withdrawals at ATMs located in those three cities."
Mr. Falvey said the withdrawal activity in the compromised accounts stopped on Tuesday. As soon as the bank became aware of the thefts, it ramped up staffing to assist customers, he said.
"Yesterday, we worked hard to promptly take care of it," he said. That included crediting customer accounts.
How the thieves gained access to the information is the focus of an internal review. One possibility is that thieves placed a card skimming device or card reader that resembles a standard ATM slot card on an ATM machine.
Mr. Falvey said he could not speculate on how thieves gained access to accounts but the bank is working with a sophisticated system's vendor to determine what happened. He expects to have an answer soon. "I think we'll know with a pretty high degree of certainty how it was done," he said. "But I'll probably need a few more days on that."
Mr. Falvey said the bank is insured against the losses. "In terms of a financial impact to the bank, this is minimal. This is much more about inconvenience to our customers, that we feel bad about."
Mr. Falvey stressed all of the bank's deposits are fully insured and safe and the bank's systems and protocols are up to date and constantly reviewed. "But you have to stay vigilant," he said.
Even as the bank was hearing from customers, social media lit up over the weekend with tales of Islanders who had discovered that thieves had gained access to their debit cards and made unauthorized withdrawals from their checking accounts.
Edgartown Detective Sergeant Chris Dolby told The Times Wednesday he is investigating four cases in which thieves used a fraudulent debit card to drain money from individual accounts. "But news of it is pretty widespread on Facebook," he said.
Sergeant Dolby, who planned to meet with bank officials later in the day, said it is possible thieves gained access to debit card numbers using a skimmer attached to an ATM machine or attached to a card reader in a store.
"What happens is they''ll create a fake card with the information they've swiped from someplace and then all of a sudden these fakes cards go into use," he said. "The bad guy will take the fake card and go to an ATM and take it for all its worth and then its shows up on your debit account. A lot of these [fake] transactions list an address of Broadway in New York City."
Mr. Dolby said there is no common denominator. Although most of the cases he is looking at involve people with accounts at Martha's Vineyard Savings Bank, he has heard of one Sovereign bank customer who also had an account compromised.
In addition to New York City, the withdrawals also originated from an Ohio address. "It varies from $100 up to $1,700," he said.
Asked for advice, Detective Dolby said, "The only thing you can really do is watch your account like a hawk and notify the bank if something goes on."
Before gassing up his truck on Tuesday, Jared Meader checked his bank account balance online. He was surprised by the low balance and thought at first that the Veterans Administration had not yet deposited his monthly disability check. But when he checked further, he saw the deposit had been posted to his account on August 30 and then drawn down through cash withdrawals made from multiple ATM machines in New York.
"The check came in on Friday, and whoever did this must have waited until the banks closed at noontime on Saturday," Mr. Meader said. "Then they just went on a withdrawal spree. It looks like they went to an ATM, did a balance inquiry, and then took out the maximum amount. So they just kept doing it over and over again, until Tuesday morning. And by the time it was done, I had $93 left. They took about $1,600."
Mr. Meader, who lives in Vineyard Haven, said he immediately went to the Oak Bluffs bank branch to report it, and the employees said, "Oh no, not you too." He was worried that it might take weeks to get his money back, because the bank would have to do its own investigation to determine it was stolen. However, he was relieved to find out all he had to do was sign some forms. He was impressed that the money was back in his account a half hour later.
"The only thing I can think of is that I used my card at an ATM machine or one of the Island stores' machines, and maybe someone put a device in one of them that copies your magnetic strip information," he said. "Because whoever did this was using ATMs; they weren't just getting your information and using it to make purchases on the Internet. They were sticking a card into an ATM that was linked to my account and my PIN."
Mr. Meader said he filed a police report in Oak Bluffs. In talking with people around the Island about what happened, he said he ran into people "left and right" that had the same experience.
"I've been telling everyone to go to the police station and file a report," Mr. Meader said. "Maybe someone can sit down and look at people's bank statements, and see if there's a common denominator, the same ATM or Island store."
"The odds are they aren't going to catch these people," he added, "but at least if they are still actively recording people's information, maybe the police can find out where."
Out of balance
J.R. Thomas of West Tisbury said he discovered his Martha's Vineyard Savings Bank account was missing funds on Wednesday morning when he went to deposit a check at the Vineyard Haven branch and asked the teller about his balance. He was shocked to learn there was only $109 in his account.
Mr. Thomas called his wife immediately. She discovered cash withdrawals of $200 and $300 from their account had been made at ATMs all over greater New York and in Kentucky. Mr. Thomas went into the Vineyard Haven office, where a bank employee went over his account transactions for the last two months.
"The bank was really on top of it; I can't say enough about what a good job they've done with their customers while taking care of the situation at hand," he said. By the time Mr. Thomas drove home to West Tisbury from Vineyard Haven, he said the money had been restored to his account.
A robber entering a bank on Martha's Vineyard's would likely be quickly noticed and confront logistical challenges when it came time to escape. Electronic thieves face no such hurdles.
Mr. Falvey said MVSB is not alone. He said that credit and debit card fraud accounted for $5.3 billion in losses in the U.S. in 2012.
Consumer Reports said that ATM and debit card fraud has become a top area of concern for banks all over the world.
Unlike credit card thieves, who usually charge merchandise and then resell it to realize cash, people who create counterfeit ATM or debit cards can simply pull cash from the card holder's bank account. Consumer Reports advises debit card holders to be especially vigilant at gas stations; use ATM machines at banks rather than in convenience stores, airports, or any isolated locations; and closely monitor bank accounts for any irregular activity.