Increase in Crime at Teller Machines Prompts Introduction of Bill to Tighten Security Rules

By MacKenzie, Christina | American Banker, July 28, 1986 | Go to article overview

Increase in Crime at Teller Machines Prompts Introduction of Bill to Tighten Security Rules


MacKenzie, Christina, American Banker


Increase in Crime at Teller Machines Prompts Introduction of Bill to Tighten Security Rules

The problems of fraud and violent crime at automated teller machines are drawing congressional attention.

"ATM will soon stand for "automatic theft machine' if we continue to ignore this burgeoning problem,' Rep. Mario Biaggi, D-N.Y., said in introducing a bill last Thursday that would set federal guidelines for protecting ATM customers.

The bill would direct the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency to establish minimum security standards for ATMs operated by member institutions. The standards would be voluntary for three years, then become mandatory, under the proposal.

In addition, the Fed and the FDIC would report to Congress on bank compliance with the standards. Also, the bill states that the Fed and the FDIC should make recommendations as to whether penalties are needed for noncompliance.

Furthermore, the bill requires the Federal Bureau of Investigation to include data on the number and type of ATM-related crimes as part of its annual report and provides tougher federal penalties for ATM fraud.

According to Mr. Biaggi, the 60,000 ATMs nationwide are used by some 58 million customers, and the volume of ATM business, which was $262 billion in 1983, is expected to increase to $524 billion by 1990.

Mr. Biaggi said that his proposed legislation was prompted by two "troubling' reports.

The first, by the Bureau of Justice, an independent agency within the Department of Justice with responsibility for publishing crime-related statistics, shows that the nation's banks lost an estimated $70 million to $100 million through fraudulent use of ATMs in 1983.

The second, published June 16 in the Santa Monica, Calif.-based credit card newsletter The Nilsson Report, said that an average of nearly one violent crime a day occurred at ATMs in 1985.

The figures revealed that for the 58 million customers who use ATMs on an average of five times a month, one in every 167,000 risks assault, robbery, kidnap, or murder. No breakdown of this figure was available.

Lisa Robertson, managing editor of The Nilsson Report and author of the study, said it was based on interviews with banks, security experts, and police departments across the country.

Ms. Robertson said the study was inspired by a California bill introduced by Assemblyman Charles M. Calderon of that state.

As originally introduced, the California bill would have applied only to ATMs outside buildings and would have required improved lighting, visibility, limiting usage to certain hours, privacy, and a video camera focused on an area wider than the present cameras. …

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