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ATM fraud: Banking on your money

A Dateline Hidden Camera Investigation shows a new kind of scam, with criminals, setting up and operating their own ATM machines, hoping to steal your personal information and later, your cash.
/ Source: NBC News

Chances are you did it this weekend: stopped off at the ATM for some cash. Quick and convenient, automatic teller machines are everywhere these days, malls, supermarkets, gas stations. And we trust that the transaction is as safe and secure as it would be at the bank. That’s what some criminals are banking on. A Dateline Hidden Camera Investigation shows a new kind of scam, with criminals setting up and operating their own ATM machines, hoping to steal your personal information and later, your cash. And it can happen with a single swipe of a bank card.

Randy Glass is a convicted con artist, a felon on probation. And now he’s a man who is trying to venture into a new business: the ATM business. Because it’s not just banks that own cash machines. Individuals can buy them, set them up in delis, or gas stations or malls, and make money on each transaction. But even Randy admits that someone with a record like his shouldn’t be able to get his hands on an ATM.

Glass: “I certainly wouldn’t sell a machine to a guy like me, considering my past.”

Dateline performed a hidden camera investigation into what might be the most innovative kind of bank robbery ever imagined. No guns, no dramatic getaways, just lots of cash suddenly missing from unsuspecting customers.That includes customers like Phil Shane and his wife Julie Brister, who one night got a surprising call from their bank.

Phil Shane: “He said, I have to inform you that the Secret Service has been watching your account.”

Victoria Corderi: “And you thought?”

Shane: “These are words you don’t ever expect to hear together. You know, the Secret Service has been watching your account. And he said, someone may have been taking money from us.”

To be exact, $3,800 was withdrawn in less than one week in November 2001.

Julie Brister: “It was a holiday time, so you know we were spending money and the scary thing was that we really didn’t notice it.”

Tim Caddigan: “You don’t even need to go to a bank to rob it anymore. Forget the gun. You don’t need to be in the same town.”

Secret Service agents Tim Caddigan and Greg James told us how it works. Before crooks can get to your money, they first have to steal the account information from your bank card as well as your pin number. And there are all kinds of ways to do that.

They’ve used telescopic cameras trained on keypads, card skimming devices that steal the information on the card’s magnetic strip, and they’ve even attached phony front panels to bank ATMs. But perhaps the most insidious ATM crime the Secret Service ever investigated involved a gang that actually went out and bought its own machines.

This ATM gang purchased not 10, not 20, but more than 50 ATM machines — and put them in a variety of stores in New York, California, And Florida. The crooks got the machines hooked up to the nation’s electronic banking network, so customers could make normal withdrawals, never knowing that inside the machines there were devices that were stealing their account information.

Victoria: “How many accounts were compromised?”

Greg James: “There were over 21,000 accounts compromised.”

That was 21,000 accounts at 1,400 banks. Once the gang had stolen the account information, they’d make duplicates of the customers bank cards. Then they’d go to legitimate bank ATMs to make withdrawals, as seen on surveillance video. It would happen so fast and so often, it was hard to identify the bad guys. But in one video, they could identify the robber. The man lingers while other customers come and go. The Secret Service says he was making one phony transaction after another. He was caught on tape, but not in person, gone by the time agents made it to the scene. But then, at a bank in midtown Manhattan, finally there was a break. Secret Service agents approached a suspect at an ATM the gang had used before to raid accounts.

James: He took off running down the street in Manhattan, And as he was running there was money flying out of his jacket, because it had $30,000 stuffed in his inside pocket.”

Corderi: “A literal trail of money.”

James: “Well yeah, it was lucky it wasn’t breezy that night.”

Agents later arrested and charged another man, too, but they say his brother, the alleged mastermind, fled to Eastern Europe with a suitcase full of cash. The gang’s ultimate take was more than $4 million.

The ATM caper sent a chill through the banking industry. But the question is, how was this man able buy the ATM machines to begin with? He had a criminal record for bank fraud.

Corderi: “Weren’t they checked? Weren’t they vetted? Required to provide business records?”

James: “To own an ATM, you need a bank account basically, and that’s all they asked for, what is your bank account?”

That was two years ago. Now the industry says it’s being much more careful. There are tough new industry guidelines, and it would hard for someone with a questionable background to buy and operate an ATM.

Which brings us back to Randy Glass. Would this convicted con man be able to get his hands on an ATM and maybe even on your money?


After a $4 million heist two years ago, the world of ATMs is now supposed to be a safer place.

Corderi: “What are the chances of something like this happening again?”

Kurt Helwig: “When the rules are adhered to, I think the chances of something like that are slim to none.”

Kurt Helwig is the executive director of the Electronic Funds Transfer Association, an ATM industry group. And he says new guidelines developed by the industry itself will make it hard for criminals to buy ATMs and steal account information.

Corderi: “Now, what’s required to buy an ATM machine?”

Helwig: “Driver’s license. Background check. Money. Some have capital requirements.”

So could a criminal buy an ATM machine today? Are companies that sell them being more careful?

Randy Glass is on probation for two felony convictions, including conspiracy to commit fraud. He says he’s gone straight and he’s helped law enforcement in the past. Dateline hired him to help us test the ATM industry’s claims.

We called 12 ATM companies in eight different states and asked if they’d need to do a background check before we purchased a machine. Only one out of 12 said they would.

Glass: “So there’s no background check if you’re buying it.”

And when Randy visited an ATM company in Eatontown, N.J., he was told that if he put the paperwork in today, he could get an ATM machine in no time flat. But what about those ATM industry guidelines? Aren’t companies supposed to check out their customers now? Apparently, not if you have $3,500 to buy a machine. And it wasn’t just the company that didn’t ask questions. The bank that enables the company to hook Randy up to the financial network also never contacted him.

Despite Randy’s criminal past, within a few days, the deal was signed, sealed and delivered. And so, amid the flashing lights of a retail store that gave us permission to install the machine, Randy got a quick lesson and then was hooked up to the National Banking Network, ready for business.

Randy Glass, felon, was now the proud owner of a fully operational ATM.

Corderi: “Did they ask you for any business references?”

Glass: “None.”

Corderi: “Credit reports?”

Glass: “None.”

Corderi: “Driver’s license?”

Glass: “No.”

Corderi: “You’re smiling because it’s so easy?”

Glass: “Yeah, it was shocked.”

Randy stocked the machine with cash. And his bank account would be automatically reimbursed every time someone made a withdrawal. We made sure no one’s account information was stolen, but in the wrong hands, it might have been different.

So we decided to take our experiment even further. This time Randy would approach an ATM company and deliberately drop hints that he had a shady past.

Glass: “Do they do financial background checks? Do they do criminal background checks? Do they do...”
Salesman: “Nothing.”
Glass: “Nothing? You’re sure? So I’m not going to have any problems whatsoever?”
Salesman: “Positive... no, no, not at all...”
Glass: “Now listen, I’m no angel.”
Salesman: “I know what you are saying. I don’t want to know what you are, what you do. What I’m looking for is like a check made out from either your personal account or your company.”
Glass: Company account, that’s it? Okay, doesn’t matter?”Salesman: “Doesn’t matter.”

The salesman from an ATM company in Yonkers, N.Y., did ask about Randy’s business.

Salesman: “What kind of business is it?”
Glass: “I’m in monkey business.”
Salesman: “Oh, is it a strip joint?”
Glass: “It’s...”
Salesman: “Because you’d be surprised...”
Glass: “I’m in the cash business A.J.”
Salesman: “Okay.”
Glass: “You understand?”
Salesman: “No, not really but...”
Glass: “I’m in the cash... I’ve got a lot of cash.”
Salesman: “Okay.”
Glass: “Alright.”

If Randy seemed shady, it didn’t appear to bother this salesman. In fact he offered to cut Randy a break, saying he didn’t have to fill in his Social Security number.

Glass: “I don’t have to worry about the Social Security number, just leave it blank? You can handle it?”
Salesman: “Yeah, because you said something about like...”
Glass: “Right...”
Salesman: “So I don’t want to put you on somewhere...”Glass: “Okay.”

Randy’s Social Security number could reveal his background. In the end, Randy did not buy a machine from him, but he did set up another meeting.

Corderi: “What if I were to tell you this guy right over here is a convicted con man and jewel thief?”

A.J. (salesman): “Then I will just walk away.”

Corderi: “But every time he made any kind of hint about having a shady background you just said no problem.”

A.J.: “I know what I said, and I really don’t want to deal with TV. I’m just trying to make a living, you know what I mean?”

And what about the president of the company that did sell Randy an ATM?

Corderi: “So I thought there was something you ought to know.”

Rindner: “Please...”

Corderi: “You know who this guy is?”

Rindner: “Just Randy.”

We told him about the background of his customer.

Corderi: “And you sold him, no questions asked, an ATM machine and I was curious to why?”

Rindner: “Are we serious?”

Corderi: “Sure.”

We were quickly asked to leave. By this time, Randy’s machine had been up and running for several days. ATM users told us they trust the machines to be safe. In fact, they were so trusting with their bank cards that no one suspected a “card cleaner” we placed besides Randy’s ATM was just like a device a criminal once used to steal card information and clean out bank accounts. One after the other they fell for it, and one after the other showed shock and embarrassment when they learned the truth.

We wanted to talk to ATM spokesman Kurt Helwig about all our adventures. And we took our new ATM machine with us to the interview.

Corderi: “Now what if I told you that that was bought by a convicted felon who didn’t try to hide who he was and got it within a few days?”

Helwig: “The issue is not getting the ATM. The issue is what you do with the ATM when you have it. This ATM is useless until it is plugged into the network.”

We explained that it was plugged into the network. There was Randy Glass, with his own working ATM.

Corderi: “What’s wrong with this picture?”

Helwig: “That’s disturbing. There are rules and regulations in place to keep this kind of thing from happening.”

Corderi: “There are lots of rules and regulations, but are they being followed?”

Helwig: “Largely they’re being followed. We’ve just looked at an example where that wasn’t the case. And that’s unfortunate. But that’s one example.”

So we showed him another example.

Helwig: “I think you need to look at the industry as a whole, in its totality.”

Of the trillion dollars dispensed annually by ATM machines, the industry insists only a very small percentage involves fraud, and that consumers are nearly always compensated by their banks. But even if the industry estimate is correct, that would mean tens of millions of dollars. It’s a largely unregulated industry. Remember, only one of the 12 companies we called required a background check.

Corderi: “Do you think it’s logical to think that we just happened upon the people who are not doing due diligence?”

Helwig: “Again, there’s always going to be people who are looking the other way.”

So what’s a consumer to do? The Secret Service says there’s no reason to panic, but every reason to check your bank statement and to report anything that looks odd about the ATM you’re using. Which is going to be a new way of thinking for some of the folks who used Randy’s machine.

The Electronic Funds Transfer Association says that if Randy Glass had actually tried to commit fraud using his ATM, he would have been stopped by safeguards the industry has in place. But earlier this month, law enforcement sources told Dateline more than 1,000 new account numbers had been stolen by criminals who had obtained their own ATM machines. Two suspects have been arrested.