Martha’s Vineyard residents targeted in debit, credit card fraud

The Martha's Vineyard Savings Bank is warning customers of a telephone scam. — Photo by Ralph Stewart

Updated 5 pm, Wednesday

Martha’s Vineyard police and bank officials are investigating the theft of debit card information from Island bank customers last week. The accounts of 18 Martha’s Vineyard Savings Bank accounts and some 75 Edgartown National Bank accounts were compromised, according to bank officials.

Bank officials said that the activity appears to have been confined to a period of several days last week, but they advised bank customers to carefully monitor their account information and transactions.

In a telephone conversation Friday afternoon, Gregory Berks, Edgartown National Bank chief operating officer, stressed, “This was not a bank breach, this was a point-of-sale breach.”

Mr. Berks said that although the bank is not responsible for the breach, all accounts are protected against any losses. “We do believe there is a local merchant who may have some type of skimming device on their point of sale, but we are still in the midst of the investigation,” Mr. Berks told The Times Friday.

He said once the bank identifies where the cards were compromised, anyone who has used a card in that business within the past months would be reissued a card. “We cover the exposure of our customers 100 percent, and we reissue cards immediately when we know there is a possibility they have been breached,” he said, “and that has been the protocol all along.”

Mr. Berks said the bank reacted speedily once it became aware of the problem, which limited its losses, which he estimated at less than $5,000. He said the bank has fairly sophisticated fraud-watch systems in place that alert it to unusual spending habits.

In a follow-up conversation late Wednesday, Mr. Berks declined to disclose what he had learned about where the thefts may have originated out of an abundance of caution while the bank continues to investigate. He said there had been no more instances of fraud since last week.

Mr. Berks said the bank is sharing its information with the Edgartown Police and Martha’s Vineyard Savings Bank.

Small event

On Friday, Tisbury police began investigating reports of cyber theft after an Island resident called the Martha’s Vineyard Savings Bank and reported that her debit card had unauthorized charges and her checking account had been drained of funds in connection with charges at a Walgreens store in Brockton.

The woman called the Walgreens store manager, who told her that Brockton police were investigating the crime and that “there were five other Martha’s Vineyard Savings Bank customers who had contacted the store regarding similar fraudulent charges,” according to the police report. Police are reviewing security footage from the store.

On Thursday, a security notice posted on the Martha’s Vineyard Savings Bank web site alerted customers to a debit card breach.

“Protecting our customers’ account information and bank security is of the highest priority to us at Martha’ s Vineyard Savings Bank,” the notice said. “We continue to use a multi-pronged approach to protecting your accounts through our round-the-clock ATM/Debit Card fraud monitoring. We will continue to closely monitor this situation and post updates if necessary. We ask that all of our customers continue to monitor their accounts and report any unauthorized charges or suspicious activity to a Martha’ s Vineyard Savings Bank Customer Service Representative at 508-627-4266.”

Paul Falvey, Martha’s Vineyard Savings Bank CEO and president, told The Times, “There are no security issues or security breaches at the bank; this is the result of a point-of-sale purchase transaction.”

In a telephone conversation Wednesday, Mr. Falvey said the bank’s vendor, not the bank, would be in the best position to analyze the common denominator, but in the context of day-to-day banking activities, “it was not even that big of an event.”

Mr. Falvey said 18 customer accounts were affected, and the bank had credited customers $9,000. He said there was no distinct pattern of activity he could point to at this time.

Mr. Falvey advised bank customers to check their accounts and report any suspicious activity to a customer service representative.

Daily occurence

Edgartown Police Detective Sergeant Chris Dolby has been investigating reports of debit card theft from Edgartown National Bank customers. Det. Sgt. Dolby said that the technical nature of credit and debit card fraud makes it difficult for small police departments with limited resources to go after thieves, particularly when the withdrawals occur far from the Vineyard.

His primary focus when investigating credit card fraud is the point of purchase and any involvement on the part of the proprietor or business. More often than not, he said, the business is also a victim.

Det. Sgt. Dolby said in this particular case common denominators are the Kelley House and Harbor View Hotel and their popular restaurants, The Newes Pub in the Kelley House and Henry’s. However, the theft of information likely occurred further “up the food chain,” he said.

“There is nothing to indicate that it was anything local,” he said. “It really appears that it was with the processing.” He said there is a third-party vendor that provides processing for both locations.

Mr. Dolby said that unlike a case last year where thieves added a skimming device to an ATM in Oak Bluffs, there is nothing to indicate that the theft of information was local.

Unfortunately, reports of credit card and debit card theft are a common occurrence. “This happens on a daily basis,” he said. “It is just constant the calls that come in here.”

Mr. Dolby said people are understandably frustrated at being victimized and by the limits of police resources to investigate the crime. He can sympathize.

“It happened to me. My American Express card was used in California a couple of weeks ago. They called me up and said, Somebody is charging $900 at a mechanic’s shop on your American Express; are you in California?”

American Express canceled his card and sent him new cards. “Do I call Van Nuys police department in California to get the video? No. That’s too much legwork.”

He said it is very frustrating, but in most cases there is not a lot local police can do to bring a case to a successful prosecution.

Det. Sgt. Dolby said he is continuing to communicate with Harbor View management and Mr. Berks in connection with the case.

Det. Sgt. Dolby spoke to William Etzine, chief financial officer for Scout Hotels. Mr. Etzine told Mr. Dolby that Scout Hotels has taken the reported credit card issues at the Harbor View and Kelley House very seriously and had undertaken its own investigation. “They looked at many different possibilities with the assistance of their IT personnel. At this time they have found no indication that the problem exists at the actual physical locations,” Mr. Dolby wrote in his police report. “Based upon their investigation they do not believe any breach occurred at the Harbor View Hotel or the Kelley House.”

Mr. Dolby said Scout researched its systems to determine if there has been any breach or fraudulent activity and found none. “He [Mr. Etzine] said that the credit card processing for the Harbor View Hotel and Kelley House are through separate systems, so any card that was used at both properties and had a subsequent breach would have been either a coincidence or at some point further up the credit card processing chain,” Mr. Dolby wrote in his report. “Additionally, they have not been contacted by any other credit card company, bank, or patron regarding any breach or credit card issues to this date.”

Skim scam

In September 2013, the FBI joined an investigation into the theft of more than $160,000 from approximately 167 bank debit card customer accounts over the Labor Day weekend, in a skimming scam that originated on Martha’s Vineyard.

In that case, thieves used a skimming device, an electronic card reader disguised to look like an integral part of an ATM card reader, to gain customer account and PIN numbers over the summer months.

The thieves targeted a Martha’s Vineyard Savings Bank ATM machine at a bank branch office at the foot of Circuit Avenue in Oak Bluffs to gain account information from people who used that ATM. They used the information to create fraudulent debit cards, and then waited for the long Labor Day holiday weekend to reap the rewards of roughly two busy months of Island ATM activity, police and bank officials said.

According to reports at the time, the thieves used the cards to make ATM withdrawals over the Labor Day holiday weekend in areas that included New York City, Indianapolis, and Chicago. Cardholders at MVSB, Edgartown National Bank, Sovereign Bank, and Bank of America all reported thefts.

This story has been updated from an earlier version to included comments from Edgartown Detective Sergeant Chris Dolby and include information regarding Scout Hotels.