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ATM Fraud: Banks Fight New Power-Off Scam
17 Feb
Summary
- ATM power-off fraud is a growing concern for banks.
- Banks seek RBI to revise compensation for fraudulent ATM failures.
- ₹2 crore was allegedly syphoned off from 50 ATMs in Pune.
Banks are facing a significant challenge from a new type of ATM fraud known as 'power-off fraud'. This sophisticated scam is causing disputes and prompting financial institutions to seek revised compensation guidelines from the Reserve Bank of India (RBI).
The modus operandi involves fraudsters cutting power to an ATM during a cash withdrawal. This action causes the system to register the transaction as failed, even though the customer receives the cash. Subsequently, the fraudster claims the money was debited from their account but never received, leading to potential compensation payouts from the bank.
Industry sources report that payment solution providers have filed numerous complaints with police across states like Maharashtra and Delhi. In one notable case in Pune, approximately ₹2 crore was allegedly syphoned off from 50 ATMs of a major national bank.
Banks have formally requested the RBI to differentiate between genuine failed transactions and suspected fraudulent ones like power-off failures. They aim to prevent automatic compensation for such fraudulent activities and discourage misuse of the current compensation framework.
