[DongleDongle] The Woman Running Through the Night to the ATM Story

Low-Income Groups Face Widespread Clone Card Fraud
Card Information Stolen via Private ATM Devices
US Does Not Even Track Total Loss Amount
Card Security Enhancements Expected to Take Years

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Recently, foreign media introduced the case of an American woman who rushes to an ATM at midnight every beginning of the month when government aid is deposited. This woman, living in Green Bay, Wisconsin, suffered from her card being cloned, resulting in government aid being withdrawn from her card for three consecutive months. The amount of damage grew until her entire paycheck of $1,300 (about 1.71 million KRW) was drained from her account. Fearful that someone would steal her cash, she ended up braving the night to head to the ATM every 1st of the month.

Currently, card cloning, known as "skimming," is rampant in the United States. Skimming fraud refers to the criminal method of stealing others' card information to steal money. The most widely used method involves attaching a cloning device to private ATMs to copy the card’s magnetic stripe. Particularly, the main victims are low-income groups. Although the government has stepped in to resolve this, it will take a long time before the government's solutions are implemented. Today, we will explore why these people have become targets of crime and what social repercussions their victimization is causing within the U.S.

Withdrawing cash using a welfare card for food assistance for low-income households in the United States. [Image source=New York Post]

◆Low-Income Support Funds Targeted by Crime... Welfare Card Security Breached

The reason scammers target low-income groups is that the government aid they receive monthly is substantial. In the U.S., various types of government aid are deposited into low-income individuals’ accounts at the beginning of each month. In California, for example, the CalWORKs program provides $7.2 billion annually to low-income families. Individuals can receive up to $122 in cash monthly.

Electronic welfare card in the United States where government subsidies are provided.

Additionally, the U.S. government supports low-income individuals through the Supplemental Nutrition Assistance Program (SNAP), providing an average of $280 per person. This year, $127 billion has been allocated for SNAP benefits, and due to the large amount distributed, it has also become a target for crime.

Some analysts argue that the U.S. government's outdated "benefit card" system creates an environment more vulnerable to fraud. The U.S. government issues government aid via magnetic stripe cards without IC chips. While IC chips are inserted into card terminals, magnetic stripe cards are swiped to make payments. Magnetic stripe cards are more susceptible to hacking such as data cloning compared to IC cards. South Korea, for example, is currently shifting from magnetic stripe cards to IC cards.

Scammers exploit this weak security. They purchase ATM card reader devices online and attach skimming devices. When an ATM user inserts their card into the slot with the device, the scammers steal the card’s PIN and account number to clone the card.

◆Damage Amounts Not Fully Tracked... Various Fraud Methods Including Reselling Goods

How much loss does the U.S. government suffer from this crime? Surprisingly, the exact amount is still not clearly identified. The U.S. Department of Social Services has not properly tracked the number of skimming fraud cases or the total damage amount.

The number of cases is only partially counted by private companies in limited regions, so a precise understanding is lacking. LexisNexis, a U.S. fraud prevention solution provider, reported 18,000 skimming fraud cases to the U.S. federal police in January this year. This is 60 times more than the 300 cases reported in January last year.

Electronic welfare card payment terminal placed in a grocery store in the United States [Image source=Bloomberg]

However, the only way to estimate the scale of damage is by looking at the reimbursement amounts paid to victims in California, which is the only state that reissues support funds to those affected by skimming.

According to Bloomberg, California spent over 100 million KRW monthly in 2021 just to reimburse victims. This amount has steadily increased to about 13.1 billion KRW as of March this year. California is known to have more robust welfare programs for low-income groups than other states, and skimming fraud reportedly occurs about twice as much there compared to other states.

As the U.S. government has not actively addressed the crime, scammers have now started targeting food assistance vouchers. They clone welfare cards in large quantities, convert vouchers into cash, and then buy expensive food items online to resell, thereby stealing support funds.

◆U.S. Government’s Response Stalled... Criticism Over Financial Security Disparities by Income

The U.S. government's efforts to catch the masterminds behind skimming fraud have made little progress. Skimming fraudsters affiliated with criminal organizations do not operate together but act independently under the direction of a mastermind, making it difficult for police to identify accomplices even when arresting one member.

A citizen paying for groceries with an electronic welfare card. [Image source=Bloomberg]

As the situation shows no signs of improvement, welfare organizations have urged the government to devise countermeasures. They demand that the government strengthen card security and reimburse victims to manage the crisis.

Ultimately, the U.S. government announced plans to enhance security for support fund payment methods. However, it is uncertain how long it will take to switch welfare cards to mobile payment systems and how many more fraud cases will occur in the meantime.

Welfare experts strongly criticize the U.S. government for neglecting financial security for low-income groups. They argue that if high-income individuals suffered cash withdrawal fraud due to card security issues, the government would not remain passive. Some experts contend that the skimming issue should be interpreted not merely as isolated incidents but as a problem of discrimination in financial security between low- and high-income groups.

Will the U.S. government be able to present effective measures to prevent skimming fraud? We hope the day comes when low-income individuals can also safely access financial services through secure payment networks.

This content was produced with the assistance of AI translation services.