atm machine
A customer stands at a Bank of America ATM machine in downtown Los Angeles. REUTERS

Shoppers who use credit and debit cards should beware the skimmer as they take out much-needed cash.

Skimmers are devices that are fitted onto an ATM machine and mask the slot where the card goes in. When a potential victim inserts the card, it is read twice: once by the legitimate machine and once by the skimmer. The thief then walks up, takes the skimmer and downloads the data.

In Europe, losses from skimming attacks have decreased, though the number of attacks is up. One reason is that thieves are exploring new methods of construction: one uses parts from audio players. By recording the data on the magnetic strip in a way similar to listening to old-fashioned audio tape, a thief can reconstruct the data.

Using a tiny camera, the skimming device then watches which buttons the user hits when entering a PIN number.

According to the European ATM Security Team, there was a 24% increase in card skimming attacks at European ATMs, with 5,743 attacks were reported for the period January to June 2010, compared with 4,629 for the same period in 2009. For the same periods, skimming-related losses fell from €156 million to €144 million.

Losses are down in part because the banks have put measures in place to defeat the skimmers, such as rolling out single standards for authenticating the cards. One feature most European cards have is the chip on the card, which the ATM uses to check the card's PIN and account information.

In the U.S., many debit and credit cards still don't have the chips, though that is starting to change. Currently the principal targets have been stand-alone ATMs and gas stations, where the more advanced machines aren't usually present. The U.S. Secret Service estimates that losses from skimming are hitting $1 billion every year.

To protect oneself, there are some simple steps ATM users can take.

- Always cover the PIN when you enter it. The cameras in a skimmer can't see the numbers when you do.

- Use ATM machines in the banks. They are usually under video surveillance and harder to tamper with.

- If the ATM looks suspicious, don't use it. If the card entry slot looks like it is loose or broken, find another ATM.

- If you use a card to pay for something, make sure you can always see it when you hand it to the cashier.