Who’s gonna stop ATM fraud?

When someone uses your automated teller machine (ATM) card without your knowledge, who you gonna call? Uhm …

ATM fraud is a reality that has threatened to plague its 14 million users in the Philippines for too long a time. With its many conveniences offered, ATM cards have become indispensable to customers. The process is very fast, instantaneous and supposedly highly secure.

Because of this, users are a popular target prey of a growing number and sophisticated type of syndicates just lying in wait to steal, pinch, swipe or even coerce unauthorized withdrawals of hard-earned money.

Not only in the Philippines

The problem of ATM fraud is not unique to the Philippines. In fact, it is a serious concern in the most developed economies. Even the United States has had its fair share of the latest ATM scams only the evil human mind can concoct.

While US banks have come up with all types of responses to counter brazen attempts by unscrupulous individuals and groupies to empty unsuspecting victims of their bank accounts, it seems that the local Philippine banks are content to just shrug their shoulders and send a few words of consolation.

Scam at BPI Sucat ATM outlet

Among the scams being used by ATM gangs, the "Lebanese Loop" is probably the most popular. Used in other countries since last year, this scam has now reached Philippine shores. This often involves stealing bankcards by the syndicate that has installed devices in ATM machines to capture the cards.

There is a particular Bank of the Philippine Islands (BPI) ATM outlet located along Sucat road (on your right side going to the airport near a popular mall) that is reportedly a favorite hunting ground of the "Lebanese Loop" gangs. Information gathered from my "e-bugs" (informers) is that several ATM users have already been victimized in that outlet.

As described by a victim, when you put your card in, the machine knows it is there but cannot read it prompting an error message to come up onscreen. The frustrated cardholder leaves the "stuck" card, which apparently will then be retrieved by the syndicate operator.

Because the pin number has been keyed in, unauthorized withdrawal starts. For one particular victim, several withdrawals were done hours after the card got "stuck".

Facts of life

One bank official, when asked if there was any justice to this, replied matter-of-factly that "life is full of risks, and problems like that are inevitable."

Banks and ATM networks oftentimes say that cardholders are given a card and PIN (or personal identification number) to be able to do banking transactions with utmost security. This is supported by the utilization of encryption and message authentication as security measures.

But an ATM card can be copied; and the PIN easily obtained. Which means it is not virtually impossible for ATM fraud to happen.

The Bangko Sentral ng Pilipinas (BSP) is now pushing for the Electronic Banking Act of 2000 that aims to enhance existing electronic banking services to serve the rapidly evolving needs of clients.

Part of the proposed law is the responsibility of banks to educate and inform their clients of how to protect themselves against fraud initiatives while instituting measures to protect cardholders and account holders from such fraudulent elements of society.

It’s about time. Because even with the increasing prevalence of bank frauds including credit card use, the local banking industry has yet to implement full concrete measures to deter such incidents.

Uncaring local banks

In the US, banks already have installed closed circuit television cameras that successfully helped deter ATM hoax. Similarly, local banks should also resort to such preventive measures.

Warning notices to advise cardholders about the Lebanese Loop and other similarly practiced scams should be more visible. If cardholders don’t get back their card, the machine could be set up for a scam and the card must be immediately cancelled.

Going back to the BPI ATM outlet at Sucat where several customers have reportedly been victimized, bank officials have apparently overlooked the simple customer caring action of prominently displaying warning notices to its clients. Makes one think that they would rather keep this "confidential" than scare and lose their customers. Such selfish attitude does not deserve our patronage.

Instead of advertising new products and services on the ATM screens, why not warning messages. ATM fraud advisory messages such as advising cardholders to be aware of strangers when punching their PIN would be more useful.

A hotline number available 24 hours a day, seven days a week, should accommodate reports of lost and stolen cards. A task force should also be formed to conduct research on what schemes are being concocted in different parts of the world, so as to prevent them from being copied here.

New laws, the latest called the "Access Devices Regulation Act," could significantly boost the country’s chances to prosecute primarily ATM and credit card fraud using any access devices to illicitly obtain or transfer of funds.

And as for our banks, we suggest that they cut back on their promo expenses and mere sloganeering, and instead put in place preventive measures to protect their ATM users. This will show genuine customer care rather than the catchy slogans.

Issues discussed on television

Today, we conclude our discussions about the "Vanishing SSS Funds." Next week, we shall discuss the issue on importation of second hand vehicles over the IBC-13 News segment "Isyung Kalakalan at iba pa" aired at 5 p.m., and with replay at 11 p.m., Monday to Friday.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns or telecasts of "Isyung Kalakalan at iba pa," you may visit my website at http://bizlinks.linkedge.biz.