Abstract

The Automatic Teller Machine (ATM) was first commercially introduced in the 1960s. By 2005, there were over 1.5 million ATMs installed worldwide. The introduction of the ATM proved to be an important technological development that enabled financial institutions to provide services to their customers in a 24X7 environment. The ATM has enhanced the convenience of customers by enabling them to access their cash wherever required from the nearest ATM. However, as the banker and the customer are not face-to-face, there is the risk of fraud, which may affect the customers and also the bank's reputation. Unscrupulous individuals have devised a number of methods to commit ATM frauds and these have become more sophisticated in nature over the years. ATM fraud has evolved from the conventional 'trick of shoulder surfing'to steal the PIN of customers at the ATM, to more sophisticated methods such as the Lebanese Loop, use of electronic gadgets, card jamming, card swapping, diversions, website spoofing, or phishing, ATM burglary, etc., which can be used to steal cash or ATM cards. Tricks used by fraudsters for stealing customers'personal details include skimmer devices, fake PIN pad overlay, and PIN interception. Though the highest numbers of ATMs worldwide are installed in the Asia Pacific region, ATM frauds are more prevalent in Europe. The UK is often termed as the capital of Europe in terms of ATM frauds. Financial institutions have implemented many strategies to upgrade the security at their ATMs and reduce scope for fraud. These include choosing a safe location for installing the ATM, installation of surveillance video cameras, remote monitoring, anti-card skimming solutions, and increasing consumer awareness by informing them of various methods of safeguarding their personal information while transacting at the ATM or on the Internet. In addition, a number of organizations across the world such as the NCR Corporation, Barclays Bank and the MasterCard have introduced fraud detection solutions. Financial institutions worldwide are shifting from magnetic strip cards to chip cards to prevent fraudsters from stealing the personal data of customers. There are also other challenges such as lack of consumer awareness, declining consumer confidence, and the fact that some financial organizations might conceal small frauds so as to maintain their goodwill in the industry. Anti-money laundering regulations are being implemented worldwide to prevent ATM frauds. UL 291 Level 1 quality standards are being followed by ATM manufacturers to make them tamper-proof. In the UK, ICC Financial Investigation Bureau, the Fraud Intelligence Bureau, and DCPCU (The Dedicated Check and Plastic Crime Unit) have been set up to deal with ATM frauds. To safeguard consumer's interests, Japan has implemented regulations that direct financial organizations to refund fraud victims. Enhanced security at ATMs and increasing consumer awareness is estimated to decrease ATM frauds, and boost consumer confidence for using ATMs and transacting online.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Automatic Teller Machine, ATM Fraud, Regulatory Environment, Banking and Financial Services, Phishing, Risk Management, Customer Information Protection, Barclays Bank, MasterCard, Visa Corporation, NCR Corporation, Citibank, Europe, Asia Pacific, Fraud Intelligence Bureau, Dedicated Check and Plastic Crime Unit, ATM Credit Debit Card, Financial Investigation Bureau, ICC Commercial Crime Services, Consumer Protection Law Policy