Ingenious ATM Frauds Raise New Safety Concerns : Banking: In one cunning con, crooks set up a bogus automated teller machine to learn secret code numbers and gain access to accounts.

It’s like a script from an underworld mastermind’s “Mission: Impossible”: High-tech thieves install a phony automated teller machine at a suburban Connecticut mall, steal data from user cards and bilk bank accounts nationwide.

Or how about this: Crooks in New York furtively videotape ATM users as they punch in their secret access codes. The videotapers use the information to make cash withdrawals.

Then there’s the con artist in Fairfax County, Va., who posed as a bank manager, duped bank-card theft victims into revealing confidential information about their codes and used it to steal even more of their money.

These are some recent examples of headline-grabbing cases that have focused attention on the safety and security of the nation’s 87,000 ATMs, one of the most popular ways to get needed cash.

ATMs have been an attractive target for robbers ever since they were introduced two decades ago. But the threat of physical assault on users has been overshadowed by nonviolent, more sophisticated thievery, hatched in some extremely clever criminal brains.

“Bankers are naturally concerned,” said Boris F. Melnikoff, an Atlanta bank executive who advises the American Bankers Assn. on security issues. “It’s been an eye-opener to the industry, to say the least.”

Yet industry experts insist that ATM fraud is still relatively rare, with losses minuscule compared to those of the credit-card industry.

They say average bank customers, especially those gearing up for some heavy ATM use this summer, have little to worry about safety-wise as long as they guard their personal identification numbers, or PINs, and take proper precautions when using a bank machine.

“I characterize the Connecticut incident as a fluke. The chances of that happening again are very, very small,” said Ronald H. Reed, senior vice president for Plus System Inc. in Denver, one of the nation’s largest ATM networks.

Sean Kennedy, president of the Electronic Funds Transfer Assn., a trade group in Herndon, Va., agreed: “There isn’t much ATM fraud right now that people are aware of. There’s probably a potential for a problem, but in actual practice it’s not a widespread, industrywide problem.”

Statistics on ATM-related losses are hard to come by. Industry experts say there is no central tracking system among the ATM networks, mainly because each reported theft is relatively small, usually totaling under $1,000.

In many cases, they say, fraud is committed by a relative or companion of the bank customer.

Even in the Connecticut case, which authorities are calling one of the more ingenious frauds, the total take is still considered well below what thieves can run up from each stolen or counterfeit credit card.

By the end of May, $65,000 had been stolen in about one month’s time from several accounts using ATMs in Virginia, North Carolina, Georgia, Florida, Maryland and New York, said Secret Service special agent Dan Marchitello, who is heading the investigation of the Connecticut fraud.

“It was one of the most innovative, sophisticated, high-tech schemes I’ve ever seen,” Marchitello said.

But he said the widespread publicity surrounding the case has helped limit losses.

Financial institutions have, in fact, built a number of anti-crime devices into the ATM system to prevent customers from seeing their savings disappear, such as placing daily limits on the amount of an ATM withdrawal or notifying customers if their ATM activity deviates from an established pattern.

Until recently, the main concerns in ATM security were in preventing muggings of bank customers. Several institutions have installed elaborate alarm systems, while at least two states--New York and California--have written laws mandating ATM safety measures.

The industry also has spent millions of dollars developing encryption systems that scramble the data traveling across the wire each time a customer uses an ATM.

In fact, the technology exists to make it virtually impossible for anybody but the cardholder to withdraw money from his or her account. For instance, machines could be programmed to check identification on the basis of fingerprints or handprints, Melnikoff said.

However, he said, “the losses would not justify that type of expenditure at this particular time.”