Since 1918, Automated Teller Machines (ATMs) have gained massive popularity and spread worldwide, providing smooth and effortless banking. They save consumers time since they don’t need to go to a bank and offer almost all the services that a human bank teller can provide. From shopping malls to some public places like airports, they are available everywhere.
However, while ATMs are a popular banking option, they still come with various risks of scams or fraud. ATM frauds have been steadily increasing over the past few years. This article explains ATM fraud types, how to spot them, and how to avoid being a victim. So let’s understand it.
What is ATM fraud?
A criminal activity is conducted through an ATM terminal to gain unauthorized access to someone’s sensitive information, such as their PIN or other account details, to steal money from their account.
ATMs primarily operate in two parts: one component manages the system to assist consumers, while the other is a secure physical vault that holds the funds.
Attackers primarily target external components, such as card readers and keypads, to commit fraud. They may aim to deceive vulnerable consumers or use tools like hidden cameras in ATMs or lock picks to obtain sensitive information.
Different types of ATM fraud
You’re probably mistaken if you believe you can secure yourself just by preventing credit card theft! Recent reports indicate that digital or technical means carry out the majority of these scams. Here are some of the most common types of ATM fraud that are used by attackers to carry out their schemes.
Card Skimming (card reader overlays)
Skimming is one of the most common and oldest ATM fraud techniques. The technique involves fitting a small device over the ATM card slot. When you use the ATM for a transaction, the skimmer’s magnetic head reads and stores the data written on your card’s magnetic strip. It often includes a small hidden camera that records your PIN as you enter it.
Fraudsters use the data and PIN stored in this device to create a fake card. This fake card works like the real one, letting thieves withdraw money from your account at ATMs.
Tips to Avoid/Prevent Skimming Fraud
A skimmer, a small device that resembles a real ATM card slot, attaches itself over the original slot. Therefore, to avoid a skimming attack, do not use ATMs where the card slot appears to be sticking out or looks unusual.
For secure transactions, always use ATMs located near banks or in well-protected areas. Please make it a habit to review your account activity regularly and promptly report any unfamiliar transactions or lost cards to your bank. Additionally, setting a withdrawal limit per day or transaction can reduce the risk of losing a large amount of money.
Card Shimming (chip data theft)
Shimming is one of the most dangerous types of ATM fraud, and it targets the more secure chip-based cards. A shimmer is a thin and small device that fraudsters insert inside the card reader slot. As soon as someone inserts their card into the ATM slot, this device comes into contact with the card’s chip and copies all the information. Later, the fraudsters use the data stored in this device to create a fake card. Then, by using that fake card, they perform illegal transactions and withdraw money from the original consumer’s account without even noticing.
Tips to Avoid/Prevent Shimming Fraud
To avoid ATM skimming fraud, always carefully inspect the card slot. If the plastic around the ATM card slot feels loose, or if you notice any extra layer or anything unusual, do not use that ATM. Please inform the bank about the ATM promptly to help protect others from fraud.
Additionally, make sure to regularly monitor all transactions in your account. If you notice any unfamiliar transactions, please report them to your bank promptly. Always use your card yourself for any transaction and avoid handing it over to others.
Card Trapping
In this type of ATM fraud, fraudsters place adhesive or a special device in the ATM card slot, causing your card to get stuck after the transaction. To capture your PIN, they also install a small hidden camera inside the ATM. When you leave without retrieving your card, the fraudster comes back, removes the trapped card, and uses your PIN to withdraw money from your account.
Tips to Avoid/Prevent Shimming Fraud
If your card gets stuck in the ATM slot or requires extra force to insert or remove, do not use that ATM. And if your card is already stuck, do not leave the ATM—instead, immediately report the incident to your bank by calling them.
Keyboard Jamming
To carry out this type of ATM fraud, criminals tamper with the keys of the ATM’s keypad. Most often, they block important buttons like “Cancel” and “Enter” so that you get frustrated and leave the ATM without completing your transaction. The fraudster then returns, completes the transaction, and withdraws the money.
Tips to Avoid/Prevent Shimming Fraud
Do not leave the ATM if you’ve entered the required information on the ATM but face issues while trying to withdraw or cancel the transaction. Immediately report the issue to your bank. Never try to use an ATM where the buttons appear jammed, as fraudsters often install skimming or shimming devices on such machines.
Phishing
Phishing is a technique where fraudsters send fake messages or emails to steal information about your account linked to your card. These messages or emails may look official, but their goal is to direct you to a fake website that resembles your original bank’s website. The aim is to trick you into entering your bank account login details. Fraudsters then use this information to gain access to your account and withdraw all your funds.
Tips to Avoid/Prevent Shimming Fraud
To protect yourself from this type of fraud, you should be able to identify such fake messages or emails. Never open a bank website through a link provided in an email. Always search for the bank’s website yourself to access it. If you notice any inconsistencies in the URL or design, do not attempt to log in.
SMS Fraud
In SMS fraud, scammers use social engineering to trick you by sending suspicious content. In these messages, they may mention something about winning a prize, an issue with your card, or the card being blocked, in order to obtain sensitive information such as your account login details or OTP.
Tips to Avoid/Prevent Shimming Fraud
To avoid SMS fraud, never reply to unknown suspicious messages. If you are aware that your credit card is blocked or any issues with it, visit the bank in person or call the bank’s official number to confirm and resolve the issue.
Some Additional Tips to Prevent ATM Frauds
- Always use ATMs located in populated areas that are in good condition. Avoid using ATMs that are in remote areas or where there is no guard present.
- Before using any ATM, especially its card slot, thoroughly check it. If you notice any suspicious device, immediately inform the bank.
- If you feel there is any fraud risk after using the ATM, immediately notify the bank and follow their instructions.
- When typing your PIN, make sure to hide the keypad properly and ensure that no one is standing too close to you while you enter your PIN.
- Never share your card’s PIN or any other information with anyone.
- For online banking, always enable two-factor authentication to protect yourself from phishing or SMS fraud.
Few Cases of ATM Fraud
- In October 2024, three Romanian nationals—Robert Mario Olteanu, Fernando Emanuel Cojocaru, and Petrican Filon—were arrested in Scottsdale and Phoenix for their involvement in ATM card skimming fraud.
- In November 2023, Romanian law enforcement, in collaboration with the FBI, conducted raids at 84 different locations to capture a gang involved in ATM skimming and money laundering. During the operation, 48 individuals were arrested, and approximately $1 million in cash and 8,000 stolen U.S. credit card numbers were recovered.
- In 2021, two individuals were sentenced to 75 months in federal prison for causing a loss of $587,529.50 to U.S. financial institutions through ATM skimming fraud.
- In May 2019, Brazilian nationals were sentenced in a federal court in Boston for installing skimming devices and cameras on ATMs of Eastern Bank in the U.S.
- In January 2018, the FIA arrested Chinese nationals for attempting to hijack the Pakistani ATM system and install skimming devices.
