Friday, 5 April 2013

How To Avoid Losing Money in a Failed (Cash Not Received) ATM Transaction

Failed ATM transactions are very common in India. Equally common are instances where victims of failed ATM transaction do not get any satisfactory resolution of their complaints made to the concerned banks or to the Banking Ombudsman. In such a scenario, the onus of protecting their interest lies on the bank customers themselves. Here are a few simple precautions that one can take:

1. Avoid using off-site ATMs

An off-site ATM is one that is installed by a bank away from its controlling branch, in a market or in a residential area. Off-site bank ATMs in India are more likely to be inadequately equipped with required security features such as the following:

(i) Security guards may not be posted by the concerned bank at an off-site ATM.
(ii) CCTV camera may not be installed, if installed may be capable of preserving recording for a very short period.
(iii) Cash refilling will be most likely outsourced to a private agency whose staff may not report any excess cash found in the ATM.
(iv) Servicing of ATM like cleaning / refilling of paper rolls and repairs of hardware is done by private agencies whose staff visit the machine without being accompanied by bank's staff. A service engineer man do some mischief with the intention of cloning of ATM cards.
(v) Off-site ATMs are sometimes located in placed less frequented by public. In such places, instances of tampering with the machine to clone ATM cards by fraudsters are very likely.
(vi) Networking faults happen more in off-site ATMs leading to hanging of machines in the middle of transactions. Money involved in such failed ATM transactions may or may not be refunded to the customer by the concerned bank (See Why Bank Customers Lose Money in Failed ATM Transactions).

2. Use the Same ATM everytime as far as possible

It is best to use one favourite ATM everytime because the customer gets used to the working of the machine and is able to notice any tampering in the keypad or the card slot by the fraudsters. See if the card slot looks like tampered with or the keypad very hard to press or unresponsive. Do not use such and ATM.

3. Avoid using any ATM at odd hours

Unless in case of an emergency, one should not use any ATM during odd hours. Fraudsters generally install cloning devices in ATMs at odd hours and remove them before dawn so that the tampering may not be noticed by any bank official or service engineer. Customers who have used their cards during those odd hours will have their cards cloned.

4. Cover keypad with one hand while entering your PIN

This one is Most Important. The fraudsters clone ATM cards by placing a cloning device in the card slot and capture the PIN by placing a hidden camera pointed at the keypad. If the customer covers the keypad with one hand while entering PIN with the other hand, he or she can prevent the PIN from being recorded by the hidden camera. Advice to cover the keypad while entering PIN is built into the ATM interface in other countries. But not so in India mainly because Reserve Bank of India does not issue any guidelines to banks to safeguard interests of ATM users in India.

5. Look for Security Features in the ATM cabin

Look before you use an ATM. See if a security guard is posted? If the ATM cabin has a CCTV camera somewhere? See if the CCTV camera is placed in such a way that it can capture the keypad? (Though very unlikely but a public sector bank can do such a blunder). If the security guard and CCTV camera are missing, it only means that YOUR BANK IS PUTTING PROFIT BEFORE SAFETY OF YOUR MONEY AND DOES NOT DESERVE TO HAVE YOUR ACCOUNT. Consider closing your account immediately and moving to another bank. See if the bank has displayed the phone number of the bank official / department / call center to be contacted in case of a problem? Some banks display the phone number of Banking Ombudsman but not of their own officials. Display in the ATM cabin of the designation, address and phone number of bank official to be contacted in case of problem / complaint is mandatory for banks in India. Many banks do not comply with this rule. If your bank does not comply too, you are banking with the wrong bank and will lose your money one day. Such banks do not have a moral right to be in business. But in India, you know... Chalta hai. 

6. Do not use ATM with another person standing next to you or behind you

If another person is standing next to you or behind you while you are entering your PIN, you are already compromised the safety of your money. That person may be a fraudster trying to know your PIN. A cloning device in the card slot may have already cloned your card. Well, a copy of your card and your PIN in a fraudster's possession are really bad news for you.

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All information given in this blog is obtained from sources in the public domain, RTI applications, discussions with bankers, bank customers in India and also with some employees of Reserve Bank of India having knowledge of the working of various Offices of Banking Ombudsman in India. All information in this blog is presented on a best effort basis and is not claimed to be complete information on any of the subjects covered in this blog. Use of any information given in this blog is purely voluntary on the part of the readers. Author of this blog does not assume any responsibility for any action of the readers related to any matter discussed in this blog or any consequences thereof. Readers of this blog are advised to consult a legal practitioner before taking any action related to any matter discussed in this blog.