House mulls ATM fraud insurance

MANILA, Philippines - The House of Representatives is considering requiring banks to offer insurance for deposits withdrawn through automated teller machine (ATM) to protect consumers from cloning and similar fraud.

The Committee on Banks and Financial Intermediaries has started public hearings on Bill 5036, or the proposed ATM Theft Insurance Act of 2014 authored by Pasig City Rep. Roman Romulo.

“The rampancy of incidents of ATM card skimming, where hundreds of millions of pesos are lost by bank customers to syndicates involved in the duplication of cards and acquiring the personal identification numbers (PIN) of unsuspecting ATM cardholders, is now alarming,” the author said.

He said his proposal “would provide relief to customers whose funds were withdrawn without their knowledge by means of card-skimming, and to victims of holdups who won’t need to gamble their personal safety.”

Citing a report by the Bangko Sentral ng Pilipinas, (BSP) Romulo said thousands of bank deposits lost more than P200 million to ATMs card hackers in 2013.

He noted that an increasing number of victims are being brought to nearby ATM and forced to withdraw money at gunpoint.

“Sadly, common victims are employees whose hard earned salaries are deposited by their employers to their individual ATM accounts or students who are away from their families and receive their allowances or tuition  through ATMs,” he said.

He said the banking industry has taken advantage of modern technology to offer services in a more convenient, speedy and simplified manner.

“However, technology has also paved the way for the proliferation of mechanisms or devices that allow access to data relevant to bank customers’ account,” Romulo said.

He added that without a law, the BSP could not compel banks to provide ATM fraud insurance to their depositors.

However, he pointed out that banks could voluntarily offer such service, such as what Philippine National Bank is doing.

“Our banking institutions are required to ensure not only the safety of the funds deposited, but also the safety of  their clients. As such, it is highly necessary to mandate all of them to offer said insurance services to all of their clients,” he said.

Not too long ago, Rep. Cresente Paez of party-list group Cooperatives Network Party complained that he lost nearly P236,000 in pension from the Social Security System (SSS) to ATM card hackers.

In a privilege speech, Paez said he had not been withdrawing from his savings account with United Coconut Planters Bank branch in Blue Ridge, Quezon City where his SSS pension is deposited.

“However, surprisingly, when I made a balance inquiry sometime in May 2013, I noticed that I had only P190.08 left in my pension account,” he said.

He said he immediately complained to UCPB but was told that from April 10 to 20, 2013, in 11 days, daily withdrawals of up to P20,000 were made from his account in various ATM terminals in Quezon City, San Pablo City and Boracay, for a total of P235,808.

He told his colleagues that he demanded from UCPB that he be refunded the withdrawn amount, since he did not make the withdrawals and the bank was supposed to safeguard his money.

Three months later, Paez said UCPB informed him that his ATM card was cloned when it was used at a Chinabank ATM outlet at the SM Mall in Cebu City.

He wondered what Congress and the BSP were doing to protect bank depositors against ATM fraud.