ATM fraud explained: Types, risks and 5 smart ways to protect your money

Automated teller machines (ATMs) are modern tools for conducting transactions seamlessly. They have made banking easier, paperless and instant. ATMs allow people to withdraw cash and view full account details, including recent transactions, at any time.

However, the comfort and convenience of ATMs have enabled fraudsters to con innocent card users and steal their hard-earned cash. They do this by utilising various tricks to steal funds and critical banking information, such as OTPs and PINs.

This makes it essential for every individual with a bank account to understand ATM fraud and how to protect themselves from financial losses.

Awareness and reading about new financial scams are the only ways to keep yourself protected from such scams.

ATM Fraud: Meaning, concept and types

ATM fraud is a way to steal money or sensitive banking information from ATM users. Some of the types are discussed below:

1. Card skimming: Here, devices secretly capture critical card data. This information is later used to carry out unauthorised transactions.
2. Card trapping: In this type of scam, victims are tricked so they cannot remove their inserted cards (due to a card dispenser or a physical device). When they seek help from authorities and others, scamsters use this time to steal funds.
3. Shoulder surfing: In this scam, scamsters observe PIN-typing patterns and OTP details. Later on, they use the PIN to carry out transactions and steal funds.
4. Phishing scams: These are straightforward card-related scams in which fraudsters use methods to coerce or lure unsuspecting debit or credit card users into revealing confidential information such as ATM PINs, OTPs, CVVs, etc. Once these details are shared, transactions proceed seamlessly, resulting in financial losses for primary cardholders.

These are just a few examples of ATM fraud and their types. The primary focus of criminals in such scams is to steal data and other sensitive information. Criminals may also install hidden cameras or fake keypads to capture sensitive information.

How can such a scam harm day-to-day card users?

Whenever ATM-related fraud occurs, it results in unauthorised transactions, psychological stress, financial losses, damage to credit profiles and credit scores, loss of hard-earned savings, identity theft and the disruption of day-to-day finances.

Victims and their families suffer immensely and lose considerable time in reporting the issue, blocking the affected credit or debit cards and recovering funds. In extreme cases, a fraud can cripple an individual’s entire life, create significant emotional stress and loss of financial confidence.

Five ways to protect your money from such scams

• Inspect the ATM before use: Never use an ATM outlet without inspecting it first. Check the surroundings diligently. Check for loose card slots, unusual attachments, hidden cameras or damaged keypads that may indicate tampering.
• Shield your PIN while entering it: Always cover the keypad with your hand to prevent hidden cameras or nearby individuals from seeing it. If anyone is standing beside you, politely ask them to step out and follow safe ATM usage rules.
• Use ATMs in secure locations: Prefer ATMs inside bank branches, in high-traffic areas or in well-monitored areas with security personnel and CCTV surveillance. Do not approach ATMs in secluded areas or those that are relatively less used.
• Enable transaction alerts: Activate SMS, text and mobile banking notifications to detect unauthorised transactions immediately and take swift action. If you need help with this, contact your bank's customer support team.
• Never seek help from strangers: If your credit or debit card gets stuck in the machine, contact your bank directly rather than accepting assistance from strangers. Never trust anyone around the ATM.

ATM fraud is becoming increasingly sophisticated. In such an environment, knowledge, proper understanding of such scams, awareness and vigilance are your strongest defence.

By staying focused and following the essential security protocols outlined above, card users can significantly reduce the risk of fraud and keep their hard-earned money safe.