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Banks lose crores in ATM fraud

Kochi, Jun 27 (): Exploiting a flaw in the design of ATM several crores of money since 2010 from banks mostly in Punjab and Kerala. The looting was kept a secret by banks till the gang were busted.

Most banks changed the design to out beat the fraudsters. The fraudsters technique in the fraud is simple and it beats the machine while withdrawing money from an ATM machine. The person who withdraws Rs 20,000 using an ATM card takes out only a part of the currency notes it throws up and lets the machine swallow the rest. Since the machine cannot count the retracted notes, the ATM of some banks credit backs the entire amount to the account.

The first bank to get targeted was Kerala-based Federal Bank which had lost Rs 75 lakh to a Punjab gang that attacked its ATMs countrywide using this method. The increase of such fraud occurred in late March and April.

Police in Kerala and Punjab after detail investigations made the first arrests in such cases in the country this week. That is when it came to attention of Federal Bank, they have subsequently scrutinised all transactions and filed criminal complaints in Coimbatore, Bangalore, Mumbai, Chandigarh, Gurgaon and Panipat. Totalling more than 30 police cases across the country were filed by TS Jagadeesan, chief general manager of Federal Bank. Apart from various police stations in Kerala and cases were filed in Punjab.

If the customer does not pull it out within 42 seconds, banks have changed design changes in their ATM machines by cancelling the retraction option. Still many of India’s one-lakh plus cash machines are still opening to this so-called transaction reversal fraud says bankers. Foreign banks ATM were not open to attacks since their ATM’s had capacity to record the retracted notes.