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ATM Fraud-How do you detect ATM fraud|ways to prevent it

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Atm Fraud increasing Despite India’s dynamic shift towards digital transactions, liquid cash still remains as the preferred choice amongst most consumers. It has been reported by the Reserve Bank of India that ATM cash withdrawals have steadily increased over the last 5 years. However, what continues to bother users is a simultaneous increase in fraudulent activities.

Preventing an ATM fraud, nowadays, goes beyond merely covering the keypad while entering the PIN (Personal Identification Number). ATM fraudsters continuously adopt newer strategies as technological advancements continue to happen.       

  • Around Rs.128 crore was lost in net banking, ATM/debit/credit card fraud in only 92 days, between 1st Oct and 31st Dec 2019.
  • Of this, ATM/debit card category reported the highest loss of Rs.94.5 crore from 11,058 cases.

Over the years, these Automated Teller Machines have evolved from a mere cash dispensing machine to a multi-service provider. With more facilities and convenience, the risk of ATM fraud in India has also soared sharply. Primarily, this happens due to a weak first line of defence, i.e. the users’ understanding of the system and security protocols.

  1. If they are careful and informed, they can bring down their chances of encountering attacks.
  2. If consumers experience a fraud, they can financially protect themselves with a customised ATM Safeguard plan offered by financial institutions.    

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What are the types of frauds in ATMs?

ATM fraud indicates to a number of fraudulent activities conducted by using a victim’s ATM card (or its details) to withdraw cash from his/her account. In fact, there are various types of frauds that criminals implement.   

  1. Trapping:

In this process, fraudsters fix a device to the machine, trapping the physical card in the dispenser. As the victim goes out to seek help, the fraudster enters the ATM and steals the ATM card.

  • Skimming:

Unlike trapping, skimming involves stealing of electronic card data, including PIN, from the magnetic strip through a pre-installed foreign device in an ATM. This process is also known as ATM card cloning as the data collected from the skimmer can be used to make a similar copy of the card for unauthorised account access.

Customers can continue with normal cash transactions until an ATM card skimmer makes unauthorised cash withdrawals by counterfeiting the card. 

  • Shimming

Shimming is when a pre-installed foreign device in the machine acquires a customer’s ATM card details from its chip. Such devices are placed between contacts of the card reader and the card.

  • India reported over 50,000 cases of ATM/debit cards, internet banking and credit cards fraud in FY2020. 
  • ATMs have already lost close to Rs.54 crore, as per data till December 2019.       

Now, if you prefer digital transactions more instead of using ATMs, note that risks of hacking, identity theft, data breaches, etc. also exist there. You can, however, receive financial protection against such damages with a fraudulent charges cover of up to Rs.80,000 from leading NBFCs.  

How to detect ATM fraud?

In most cases, customers detect fraud on finding unauthorised transactions or money debited from their account. They receive notifications or messages instantly. The debit is also documented on the account statement.    

Apart from that, various signs on the machine can reveal ATM skimming. Users should check for the following before transacting at an ATM:

  1. Odd-looking card slot
  2. Scratches on that machine
  3. Raised keypad
  4. Spongy or loose keys
  5. Bulky card slot
  6. Blocked or loose card slot
  7. Sticky glue or tape anywhere on the ATM

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How to prevent frauds at ATMs?

If you are cautious, responsible and watchful, it would be difficult for fraudsters to victimise you. 

  1. Check account statements frequently to identify any unauthorised transactions.
  2. Register for SMS updates so that you receive notifications of your transactions instantly and report accordingly.
  3. Visit an ATM that’s well-lit, visible to passers-by, is under CCTV-surveillance, and has a security guard.
  4. Look for anything unusual before inserting your ATM card into the machine.
  5. Check if the card slot is a little more extended and a skimmer is attached to avoid ATM cloning.
  6. In case a camera is present, covering the keypad properly when entering the PIN can keep you protected.
  7. If your card traps inside, try getting help without leaving the ATM or going away from the machine.
  8. Last but not least, if you spot anyone acting suspiciously around your vicinity or loitering around, either inform the police or leave the ATM.

While prevention is better, you may not always stay protected from an ATM fraud in India. Hence, the best solution for such circumstances is to buy an insurance plan. NBFCs like Bajaj Finserv, under their Pocket Insurance & Subscriptions, offer customised Wallet Care to provide comprehensive financial protection. You can enjoy up to Rs.2 lakh of coverage against a nominal premium of Rs.599.

As modern technologies emerge, fraudsters come up with newer ways to victimise ATM card users. Hence, opt for card protection plans from reputed financial companies to protect against colossal financial loss. Also, staying cautious and following the prevention methods is likely to thwart any such malicious actions. 

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