Business | Banking
Banks warn customers to be vigilant
Copying of cards and personal identification numbers biggest ATM fraud issues.
- By Babu Das Augustine, Banking Editor
- Published: 01:10 March 4, 2008
Dubai: Banks and credit card companies operating in the UAE on Monday played down the potential impact of ATM fraud and identity theft reported by the UAE central bank. However they warned customers to be vigilant with their ATM and credit card transactions.
Gulf News enquiries revealed that many banks sent out internal memos to their employees yesterday asking them to monitor ATM transactions. All the banks, however, said their ATM machines were not affected by the fraud.
Banking industry sources said yesterday the affected ATM machine is located in Abu Dhabi. As the fraud was discovered in a few hours of the attempt, they said it was unlikely that customers were affected.
Credit card industry sources said yesterday they have not been notified by banks about any large-scale identity theft. "Phishing [identity theft] happens from time to time with limited impact and we work closely with banks in containing the impact of such frauds. We see the central bank warning more as a general warning and do not expect it to have any wider impact on customers across the UAE," said an official with a credit card company.
The last big ATM fraud was reported in 2006. It affected a few hundred customers of half a dozen banks in the UAE. Many bankers yesterday said the impact of the latest attempt is likely to be much smaller in scale as banks are better prepared.
Meanwhile, HSBC has stressed its cards and ATMs were not affected by the recent fraud. Jonathan Campbell-James, head of regional security and fraud risk - HSBC Bank Middle East, however, said public awareness is very important in fighting such fraud.
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The biggest problem for banks in respect of ATM fraud is the copying of cards and personal identification numbers (PINs) by organised crime groups. This is done by the placing of false card readers on the entry slot of an ATM together with a carefully sited micro-camera to read the PIN, as it is input by the customer.
"This is an area where the bank can take the initiative and HSBC Group has invested heavily by installing devices in its ATMs that prevent this type of activity. All of our ATMs in the UAE are covered by these devices, meaning that 'card skimming' on our machines is highly unlikely," he said.
However the bank said that customers should always look out for anything unusual around ATMs.
There are two other ways in which ATM fraud can occur. Criminals may insert a device through the card slot that jams the card before it fully engages in the machine.
As a result, the customer will be unable to obtain cash and the card will remain in the ATM. The criminal will be close to the ATM and try to help the customer by suggesting that they re-input their PIN to try to retrieve the card. Once the customer leaves the ATM, the fraudster will retrieve the device and the card, and then try to make cash withdrawals.
The second method relies on deceiving the customer into believing that his card has been retained by the machine. Again, the criminal will be in close attendance, trying to observe the PIN as it is input.
As the transaction progresses, he will create a diversion just before the card comes back out of the machine. They might do this by placing a small value banknote on the floor and then asking the customer if they have dropped it.
As the customer's attention is diverted, the criminal or an accomplice pockets the card from the ATM. The customer believes his card has been retained. If the criminal is unable to observe the PIN the first time around, he attempts to get the customer to re-input the PIN in order to retrieve the card.
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