ATM Fraud: Meaning, Types & Prevention Tips

Posted on: Jun 5, 2024 | 3 mins | Written by: HDFC ERGO Team

ATM Fraud: Meaning, Types & Prevention Tips

Nowadays, you can find an automated teller machine, or ATM, at every corner of the road. Every person living in rural areas or urban cities has made a quick trip to the nearest ATM to withdraw cash or check their bank account balances. While easy access to money around the clock is great, this convenience comes with the risk of ATM fraud.

Let's discuss what ATM fraud is, various methods of such scams, and practical tips for a safe ATM experience.

ATM Fraud: What Is It?

Rahul goes to an ATM. He swipes his debit card. He enters his PIN. He doesn't know the ATM contains a skimming device reading his card information. The scammer creates a fake card with this stolen information and drains money from his account. That's ATM fraud in action.

ATM fraud refers to any criminal activity involving unauthorized access to an individual's ATM card or account details to steal money. As you know, ATMs are sophisticated computers within a secure vault. However, these systems have vulnerabilities that fraudsters can target, including:

• Operating System

Crooks can use vulnerabilities in obsolete or unpatched ATM operating systems to take control of the device and get card information.

• Physical Security

Although ATMs have safe deposit boxes, the card reader and keypad are exterior parts. Scammers can install skimming devices to steal card data from these places, taking advantage of the weak physical protection.

• Network Security

Network assaults are commonplace in ATMs with improperly set firewalls. Thieves may use this flaw to steal data remotely.

Knowing these shortcomings can enable you to detect and stop ATM fraud.

ATM Frauds: Types

Scammers can employ various tactics to steal your sensitive information and money, including:

• Card Skimming

This classic example of ATM fraud involves installing a hidden device on the ATM card reader. As you insert your card, the skimmer copies its magnetic stripe data. If you're not discreet, tiny cameras might also capture your PIN. Fraudsters then use this stolen information to create a duplicate card and withdraw funds.

• Card Shimming

Like skimming, shimming utilises a thin insert placed discreetly within the card reader. It discreetly reads your card data without interfering with the ATM's functionality. Shims are virtually undetectable, unlike bulky skimmers.

• Card Trapping

This method employs a device lodged inside the ATM that retains your card after you insert it. The thief, watching through a hidden camera, waits for you to leave in frustration, then retrieves your card and uses it later with a stolen PIN (perhaps obtained via a hidden camera).

• Keyboard Jamming

Here, the culprit attaches an overlay onto the ATM's keypad, making it difficult to press specific buttons, particularly 'Cancel' or 'Enter.' It may frustrate you and lead to abandoning the transaction, leaving your card vulnerable if the thief retrieves it.

• Phishing

This scam doesn't directly target ATMs. Scammers steal your card details beforehand through phishing emails. Disguised as legitimate sources like your bank, scammers trick you into clicking harmful links, which leads to fake websites that capture your card information and PIN.

• SMS Fraud

Like phishing emails, scammers send SMS claiming your card is blocked due to suspicious activity. Once you engage, they will request that you reply with your card details, PIN, or OTPs, to 'unblock' the card.

ATM Fraud: Tips to Avoid

Here are some key tips to avoid the threat of ATM fraud:

1. Choose your ATM wisely and inspect it

You can take the following steps:

• Use ATMs located in crowded and well-lit areas within secure buildings or banks.

• Look around the card reader or keypad of the ATM for any strange attachments before inserting your card.

• Look for loose parts, skimming devices, or hidden cameras.

• Don't use the ATM if anything appears unusual; report it to the bank.

2. Shield your PIN from strangers

• As you type your PIN, always keep your palm on the keyboard. It keeps someone from stealing your PIN via shoulder-surfing.

• Observe your surroundings as you use the ATM. If someone appears suspicious or hangs around too much, cancel your transaction and use another ATM.

3. Monitor your accounts regularly

Early detection can minimise losses when you promptly report fraudulent activity. Hence, check your bank account statements for unauthorised transactions.

4. Use chip-enabled cards

Opt for chip-enabled debit or credit cards. Chip technology offers better security than traditional magnetic stripe cards.

5. Avoid replying to suspicious messages

Even if the message appears from your bank, keep your card details and PIN private from everyone. Banks will never ask for such information.

6. Consider using contactless payments

You should leverage contactless payment options for ATM withdrawals, like mobile wallets linked to your debit card. By not having to insert your card, you reduce your risk of skimming or trapping.

7. Inform your bank about your travel plans

In normal circumstances, international ATM activity is flagged as fraud. Therefore, when travelling abroad, notify your bank beforehand to prevent service interruptions.

The takeaway

Indeed, knowledge is power. With this understanding of how scammers carry out ATM fraud, you can take preventive measures to defend yourself and your hard-earned money against its threat. For further protection, consider a cyber insurance policy from HDFC ERGO. It includes:

• Cyber insurance for the family for more comprehensive coverage for households with multiple ATM cards

• Cyber insurance for working professionals with coverage against ATM and online scams or data breaches

FAQs

Q: What should I do if my ATM card becomes stuck in the machine?

A: Avoid yanking out your ATM card if it gets stuck. Contact your bank and report the incident as soon as possible. The bank can remotely release the card or guide you on further steps.

Q: Will I get reimbursed in case of ATM fraud?

A: Banks have policies to reimburse customers in the event of an ATM fraud, provided you haven't acted negligently (e.g., shared your PIN with someone). However, report the incident promptly to minimise your liability.

Q: Can I take any additional security measures against ATM fraud?

A: You can control your ATM card through mobile apps. It includes setting spending limits, restricting ATM withdrawals, and temporarily deactivating your card.

Q: How can I make my ATM PIN secure?

A: You can safeguard your ATM PIN in the following ways:

• Decide on a PIN that is difficult to guess.

• Avoid using your or your close family's birthdays, anniversaries, or other easily identifiable numbers.

• Never share your PIN with anyone.

• Never write it down on your card or anywhere else easily accessible.

Disclaimer The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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