How Texas banks are catching skimmers

A group of Texas financial institutions is teaming up with law enforcement to crack down on rampant card skimming in the area. Their fraud prevention efforts, which included boosting new anti-skimming laws, started at a community bank.

By Katie Kuehner-Hebert

When Ken Hartley became the bank security officer of $2.6 billion-asset Texas Bank and Trust Co. in Longview, Texas, after retiring from the local sheriff’s office, he was struck by how closely guarded banks were with each other about the financial crimes they suffered.

“In police work, when a crime took place, the information was immediately dispatched to all agencies to be on the lookout for the described suspect,” he says. “The main goal was to get the criminal apprehended, no matter who makes the arrest. But the banking industry at that time was very reluctant to share fraud information with each other.”

In 2010, Hartley persuaded the board of Texas Bank and Trust Co. to let him form a fraud prevention group with local banks and credit unions, along with local, state and federal law enforcement officials. The group started meeting monthly to discuss the common characteristics of the financial crimes that affected them. They began to regularly exchange email alerts when these incidents, such as fraudulent scams, bogus checks or counterfeit currency, or robberies, occurred in the area.

“The email alerts significantly aided each institution to identify those suspects who sought to defraud our banks and customers,” Hartley says. “We discovered through our bonding that we are capable of preventing fraud and decreasing losses, and we were able to assist our law enforcement officers and prosecutors.”

A year later, a second fraud prevention group was established to connect financial institutions and enforcers in Longview (Gregg County) and Tyler (Smith County), with the adjoining counties of East Texas. There are now 450 members receiving emails from both groups, and the entire coverage area has expanded west to the Dallas-Fort Worth area, north to the Mt. Pleasant-Texarkana area, south past Lufkin, and east to Shreveport, La.

Stopping skimmers

One particular crime that the group has been able to stymie is theft from card skimmers. “We have utilized our combined efforts to make immediate alerts when ATM or gas pump skimmers are initially discovered, which has drastically decreased subsequent losses to the affected banks,” Hartley says.

The credit and debit card departments at member institutions have frequently sought out the common point of sale, providing the information to the joint banking enforcement group working with the FBI, U.S. Secret Service and the IRS Criminal Investigation field offices, located in Tyler, Texas.

Sharing threat data

FS-ISAC provides a peer-to-peer network for the financial sector to share information on threats like skimming. Visit for more information.

“These officers quickly respond to examine pumps believed to have been breached,” Hartley says. “Quick communication of this information decreases subsequent losses to the financial institutions and provides a greater chance for the authorities to discover and confiscate the electronic contraband inside the pumps.”
Jeff Roberts, a detective in the Tyler Police Department’s financial crimes unit and a member of the fraud prevention group, says that, oftentimes, law enforcement is alerted to skimmers in the area because of input from financial institutions. “When banks self-report, especially when it comes to skimming activity, it allows law enforcement to have a more immediate understanding of where the compromised spots are occurring,” he says.

Roberts “highly recommends” financial institutions and law enforcement in other communities to form similar groups. He adds: “It makes everyone’s jobs easier when banks and law enforcement are working together, and it leads to more prosecutions.”

Turning fraud prevention into law

Ken Hartley

In addition to sharing information with fellow banks and law enforcement, a group of banks and law enforcement officials in northeast Texas have prevented fraud by supporting state laws to crack down on card skimmers.

“Our efforts were recently recognized as several House bills were signed by Texas Gov. Greg Abbott that address the possession and use of skimmers and counterfeit cards,” says Ken Hartley, a bank security officer at Texas Bank and Trust Co. in Longview, Texas, who was responsible for forming the group.

One of the bills, H.B. 2945, strengthens the role of gas station merchants in the fight to thwart skimmer fraud. If a merchant discovers a skimmer or is notified of a skimmer by a service technician or another person, the merchant must immediately disable or get another party to disable the motor fuel dispenser on which the skimmer was discovered and notify a law enforcement agency that a skimmer has been detected.

The merchant must take appropriate measures to protect the dispenser from tampering until the law enforcement agency arrives. Within 24 hours, they must notify the state agency that supervises companies servicing the pumps.

That department will then coordinate with law enforcement and a newly created payment fraud fusion center, a command center in Tyler, Texas, for local, state and federal law enforcement and governmental agencies fighting skimmer fraud.

If a merchant willfully fails to report and disable a dispenser that has an attached skimmer, or if they fail to cooperate with law enforcement in the investigation of a discovered skimmer, they’re subject to civil penalties up to $5,000.

The Texas Attorney General’s Office may order the merchant to take corrective action as necessary, including the implementation of fraud prevention best practices and employee training to detect skimming devices.

Two other new laws strengthen the prosecution of skimmer fraud, including making it a felony to fraudulently use or even possess card information obtained via a skimmer. All of the newly enacted laws took effect Sept. 1.

Katie Kuehner-Hebert is a writer in California.