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. Last Updated: 07/27/2016

ATM Bandits Take Swipe at Moscow




Visa International has opened an investigation, the German Embassy has quietly passed on warnings and more and more fleeced expats agree: If you put your credit or bank card into an ATM in Moscow, you could well get robbed.


Automatic Teller Machine and credit card users in Moscow are increasingly falling victim to "skimming" - when criminals use electronic devices to steal PIN codes and bank information that is recorded on a card's magnetic strip. In most cases, the information is sent via e-mail to partners abroad, who place it on a new card that can then be used to pillage the victim's bank account or credit line at the nearest ATM.


Russian banks are loathe to discuss the issue.


"Banks are secretive. They don't want to talk about the problem," said Pavel Stromsky of United Card Services, a Russian card-processing firm.


He said that ATM fraud spiraled out of control after the August financial crisis of last year.


No particular ATM provider or credit card merchant has been singled out for criticism, although "skimmed" expats say their gut feeling is that generic ATMs, such as those found in some metros, should be avoided in favor of those of established banks.


To minimize the chances of becoming a fraud victim, several experts suggested it was best to make bank-card transactions at a bank window with a live teller. It is also a good idea to keep your own careful records of what you spend and where, including copies of pay slips.


Stromsky of UCS said the most common tip-off that an ATM customer's card information may be being stolen is when the machine accepts the PIN code, but then refuses to complete the transaction for "technical" reasons.


And while Russia has a problem, this is also a growing international concern. The U.S. Secret Service, which investigates financial fraud in the United States, says that skimming has boomed around the world in the last year.


"Many of the operations, although not quite all of them, are international in nature," Jim Mackin, a Secret Service spokesman in Washington, said in a telephone interview.


He said the electronic device used to skim card information is roughly the size of a telephone pager and can be used by a waiter in a restaurant when a customer pays the bill with a credit card, or it can be placed in an ATM machine and removed later.


"In many cases, accounts that are skimmed here [in the United States] are being accessed within 24 hours in the Far East and Europe," he said.


Available evidence shows Moscow, New York, Tel Aviv and Warsaw as the main cities where the crime rings are operating. In all of the cases of fraud confirmed by The Moscow Times, victims received bank statements showing that fraudulent transactions had been made in their name in those cities.


Ben Aris, a Moscow-based journalist, had his credit card skimmed in Moscow while using an ATM for a cash advance.


"Apparently I bought two tickets to France while I was in New York [in August]," he said. "Trouble is, I have not been to New York for more than a year and half."


However, he said his British-based bank did not protest and credited his account.


"The woman I talked to said that mine was not the first case," Aris said.


In most cases, victims' money was quickly refunded by their banks.


However, Sean Holloway of the U.S.-Russia Business Forum was not so lucky. He lost $6,200 in less than four days this summer from what he says were fraudulent transactions conducted at Moscow ATMs, and has yet to get it back.


Citibank, the New York-based bank that issued his ATM card, initially credited his account, but later sent a letter saying its investigation had shown all the transactions - which filled two pages - to be legal.


Holloway ran into a stone wall when he tried to convince the bank that he had indeed fallen victim to fraud, even though on one day nearly $2,000 was taken from his account, twice the daily limit on his card.


"They won't give me any information on what the investigation revealed," he said. "Everybody I speak to says they personally believe me, but they still won't give me my money back - I'm being treated like a four-year-old."


Citibank officials in New York and Moscow could not be reached for comment Tuesday.


Meanwhile, Holloway says he is getting a lawyer to help him sue the bank.


Visa International, a major credit-card company, began an investigation into Russian ATM and credit-card fraud in March.


"It is a problem, and we are currently investigating," said James Wood, chief spokesman at Visa's London headquarters, in a telephone interview. He would not discuss details, citing an ongoing investigation.


The German Embassy acknowledged the problem last month, when it sent a message to all German banks in Moscow warning them about the new type of card fraud.


German banks here refused official comment, but said that the warning was issued after two German bankers in Moscow fell victim to a skimming operation.


Other industry insiders said that card skimming in Russia still ranks behind more low-tech fraud schemes that have been commonly used around the world for years.