ATM Frauds In India And Their Techno Legal Preventive Measures

ATM Frauds in India are increasing at an alarming rate. If we add to it the cases of Credit Card Frauds, Internet Banking Frauds and frauds committed using Phishing techniques, the numbers are really shocking.

It is not the case that Reserve Bank of India (RBI) is not aware of these cases nor is it the case that RBI is not doing anything in this regard. In fact, RBI has recently released the Report of its Working Group on Securing Card Present Transaction that covers ATM Security and Credit Card Security issues as well.

RBI has also recommended Cyber Security Due Diligence for Banks of India. However, despites these pro active steps, ATM Frauds are increasing in India. One chief reason for this growth is that Banks in India are not serious about Cyber Security and they are not following the Recommendations of RBI.

ATM Frauds happen when someone leaves his/her credit card unattended in a vehicle or changing room or allows anyone else to use the card or looses the card that is misused by others or discloses the Personal Identification Number (PIN) to others, etc. These mistakes allow the offender to withdraw money by using the stolen information. Fraudsters are using special devices, skimmers, duplicate ATMs, etc to withdraw money from ATMs. Sometimes such frauds are an insider job with the collusion of the employees of the company issuing those cards. However, misuse of the disclosed PIN for withdrawing money is the most common techniques used for committing ATM Frauds.

ATM Frauds can be prevented if we take some basic level precautions. For instance, never leave your credit card unattended in a vehicle or changing room, never allow anyone else to use your card, always retain sales/charge slips to compare with the amount specified on the billing statement, do not disclose your PIN to anyone, etc.

The Technology can also be used to minimise cases of ATM Frauds in India. The technological mechanisms like Designated time, Microchip technology, Biometric tokens, Enhanced security, ATM Monitoring, Customised softwares, Customer motivation, Alerts, etc can be used to minimise and prevent ATM frauds in India.

Another reason for growth of technology related crimes and ATM Frauds in India is absence of “Deterrent Law” in this regard. The Information Technology Act, 2000 (IT Act 2000) is the sole Cyber Law of India. After the Information Technology Amendment Act, 2008 (IT Act 2008) almost all the Cyber Crimes in India have been made “Bailable” Now Cyber Criminals can commit almost all Cyber Crimes, ATM Frauds, Credit Card Frauds, Internet Banking Frauds in India without any fear. It is high time to repeal the Cyber Law of India as soon as possible and enact Strong and Effective Laws in this regard.

The IT Act, 2000 does not contain any specific provisions regarding ATM Frauds and Credit Card Frauds and the traditional law of IPC, 1860 also cannot be relied solely and independently to tackle this problem. We need a better law for this purpose and Perry4Law and Perry4Law Techno Legal Base (PTLB) have already provided their Suggestions and Recommendations in this regard and other ICT related matters to the Government of India, Department of Information Technology, Department of Science and Technology, Prime Minister’s Office, etc from time to time.

Till we have suitable and apt laws, we must apply existing laws in a purposive and updating manner. However, ATM frauds can be tackled by using Techno Legal Methods alone and neither Legal nor Technical Measures is sufficient in itself.

RBI Recommended Constitution Of Secure Systems To Check Credit Card Frauds

Reserve Bank of India (RBI) has recently released the report of its working group on securing card present transaction. RBI has also prescribed cyber security due diligence standards for banks of India that must be implemented in a phased manner.

Despites these pro active steps, cyber security of banking sector of India is not upto the mark and ATM frauds, credit card frauds, internet banking frauds, etc are increasing in India. This is primarily due to the fact that banks in India are not following the recommendations of RBI.

ATM frauds and credit cards frauds cannot be tackled effectively till we use techno legal measures. Amid rising instances of debit and credit card frauds, an RBI panel has recommended that banks should put in place secure systems to check such cases within a year's time. All acquirers and issuers may put in place adequate fraud risk management systems and processes within 12 months, said the panel in its recommendations for an action plan to implement additional authentication for all card transactions.

For the benefit of debit card holders, it suggested that all transactions through such cards should have a PIN (Personal Identification Number) as an additional factor of authentication at point of sale (POS).

Further, mechanisms like designated time, microchip technology, biometric tokens, enhanced security, ATM monitoring, customised softwares, customer motivation, alerts, etc can be used to minimise and prevent ATM frauds in India. The banks must spread public awareness in this regard among the public so that these frauds can be prevented.

However, preventing ATM frauds is not the sole problem of banks alone. It is a big threat and it requires a coordinated and cooperative action on the part of the bank, customers and the law enforcement machinery. The ATM frauds not only cause financial loss to banks but they also undermine customers’ confidence in the use of ATMs. This would deter a greater use of ATM for monetary transactions. It is, therefore, in the interest of banks to prevent ATM frauds.