ATM Fraud: Meaning, Types & Prevention Tips

ATMs are designed to make banking easy for individuals; however, they are currently one of the most common targets for fraudsters. According to the Reserve Bank of India (RBI) report, the number of ATM frauds in the Financial Year 2024-2025 involved an amount of ₹1,037 crores.

Thus, staying aware and updated about ATM scams is your best defence at present. Hence, continue reading this blog to learn what ATM fraud is, its types and the preventive steps you need to take to safeguard yourself from becoming the next target.

What is ATM Fraud?

In simple terms, ATM fraud refers to any type of criminal activity where scammers exploit your card, PIN and account details to steal your money through illegal use of an ATM.

For instance, you go to an ATM, swipe your card, and you are unaware that a skimmer is installed to read all your personal information. The scammer creates a fake card with this stolen information and drains all your money from your account. This is ATM card fraud in action.

However, despite advanced systems, certain weaknesses, such as a poor network or a tampered card reader, make ATMs vulnerable to fraudsters.

How do Fraudsters Target ATMs?

Network Security

ATMs without configured firewalls are prone to remote cyberattacks. Scammers can breach the system security and steal personal data.

Physical Security

Even though the ATMs have secured deposit boxes. However, the card reader and the keypad are exposed. Scammers install skimming devices in these places to extract data and use it for fraudulent purposes.

Stay protected beyond ATM safety. Get Bajaj General Insurance’s Cyber Insurance online to safeguard yourself from digital financial loss caused by ATM fraud.

What are some of the Types of ATM Fraud?

Card Skimming

Card skimming involves installing a hidden device in the ATM card reader. Once you put in the card, the skimming device copies all the magnetic stripe data. Cameras or fake keypad overlays may also capture your PIN. Fraudsters then make a fake card to withdraw money.

Card Shimming

A thin chip-based device named a shim is placed inside the card reader. It carefully reads all your card data without even disturbing the ATM's functionality. Moreover, shims are not detectable, unlike the bulky skimmers.

Card Trapping

This method depicts a device lodged inside the ATM that retains your card after you have inserted it. The scammer sees you from a hidden location, and after you retrieve your card, they use it later with a stolen PIN.

Cash Trapping

Scammers install a small chip in the cash dispenser. Consequently, when you attempt to withdraw, the ATM malfunctions, and you leave without the cash. ATM fraudsters then come and remove the trapped money.

Card Not Present (CNP) Fraud

CNP fraud primarily occurs when stolen card information is used in online transactions without the physical card being present. Additionally, your card information is extracted through ATM skimming.

SMS Fraud

Like phishing emails, scammers send you SMS notifications claiming that your card has been blocked due to some unusual activity. The moment you engage with them, they will ask you to provide your card details, PIN, and OTPs to unblock the card.

Phishing

Phishing does not directly target ATMs. With email phishing, they obtain your card details. Instead, disguise themselves as a legitimate person, like someone from your bank. Scammers trick you into clicking on malicious links, which can lead to fake websites. 

Jackpotting

This is a high-tech phishing attack in which criminals install malware in ATMs, enabling them to withdraw large amounts of money on demand. This requires access to the internal machine and is mainly done by expert scammers.

ATM fraud scams often result in substantial financial loss. In these losses, Bajaj General Insurance’s Cyber Plan covers direct and pure economic loss arising out of unauthorised physical use of debit/credit or cash cards.

How to Detect a Skimmer on an ATM?

To know if there is a skimmer in the ATM, you need to look for these factors:

1. Step back and check the ATM as a whole before withdrawing money.

2. Check if the card is sticking out abnormally.

3. See if the keypad appears to be thicker than usual.

4. Look for cameras in the ATM to see if they seem unusual.

5. Inspect if the card reader appears bulky.

6. Scan for extra wires around the card reader.

Tips to Prevent ATM Fraud

Now that you know what ATM fraud is and its types, it is also essential to understand how to prevent it.

Inspect the Machine

Check the card slot and see if you find anything unusual. If you feel it is uncommon compared to what it appears, avoid inserting your card into the reader machine.  

Cover your PIN

When entering your PIN into the ATM keypad, always keep your hand on the keypad to prevent unauthorised access. Additionally, be aware of the surroundings and cancel the transaction if you notice any suspicious activity.

Do Not Take Help From Strangers

Avoid taking help from strangers. If you are unable to process the withdrawal, seek assistance directly from a bank representative or a family member. You do not know about a stranger’s intention. Thus, it is better not to take any risks.

Be aware of Non-bank ATMs

Most skimming occurs at non-bank ATMs. These are primarily cash dispensing machines located near convenience stores. Be aware that these ATMs are commonly used by everyone, making it easier for scammers to steal the information.

Stay in Public

Always try to use machines that are closely located in the public view with strong security monitoring. These machines are less likely to be tampered with by scammers. For added security, use an ATM located inside your bank.

Consider Using Contactless Payment

An alternative payment through mobile banking or internet banking is a much safer option because your card details are tokenised. You can use digital payment platforms such as Google Pay, Apple Pay or Samsung Pay.

Enable Multi-Layered Fraud Protection

Enabling multi-factor authentication adds an extra layer of protection. Even if a scammer steals your personal information, this multi-layered fraud protection will help secure your money.

Set up alerts

See what type of Fraud alert system your card has. Even if the fraud is not entirely preventable, catching it early makes it easy and can help you get real-time notifications.

Safeguarding Against Fraud with a Cyber Insurance Plan

As cybersecurity continues to evolve, even with precautions in place, fraud still occurs. Which is why cyber insurance plans stand as an essential safeguard; they protect you from losses resulting from ATM fraud, hacking and Phishing.

Secure your money with companies like Bajaj General Insurance’s Cyber Insurance Plan and get coverage against:

1. Theft of funds at Automated Teller Machines (ATM)

2. Digital theft of funds

3. Physical theft of funds

4. Malware cover

5. Phishing Cover

6. Privacy breach and data breach by a third party

Final Thoughts

From skimming to high-tech jackpotting attacks, ATM fraud is evolving rapidly, putting your hard-earned money at risk without you realising it. One wrong swipe and a single distraction is all it takes for scammers to steal your money.

Thus, taking an extra layer of protection with a cyber insurance plan will safeguard you in recovering your economic loss caused by debit card fraud.

Frequently Asked Questions

What are the latest ATM fraud trends?

The latest trends in ATM fraud include advanced skimming devices, wireless remote access and cash trapping. These are some of the new methods through which ATM fraudsters can trap their target.

How to investigate an ATM fraud?

To investigate ATM fraud, you must first report it to your bank to block the card. Then file a complaint at your nearest police station and submit that written document to your bank. Additionally, collect all relevant documents, including bank statements and records of fraudulent transactions.

Do banks review camera footage to detect ATM fraud?

Yes, banks do review the camera footage to detect ATM fraud. With the help of the installed cameras, the bank detects skimming devices and prevents skimming from occurring.

How is an ATM card misused?

ATM cards can be misused in various ways, such as unauthorised use of ATM cards, PIN  theft and phishing.  You can prevent this from occurring by scanning the ATM's surrounding area carefully.

What should I do if my ATM card gets stuck?

In this situation, do not take help from any strangers. Contact your bank immediately, as they can help you remotely block your card. 

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.