Fraudsters blow a hole in the wall

As cashpoint crime rockets, Sam Dunn surveys the strategies used by thieves and what consumers can do to combat them

It's a world of tiny spy cameras, police crackdowns and multi-million-pound fraud - welcome to your high-street hole in the wall.

It's a world of tiny spy cameras, police crackdowns and multi-million-pound fraud - welcome to your high-street hole in the wall.

Some £61.1m of electronic swag has been swiped from our bank accounts by cash machine fraudsters in the year to June - almost double the sum for the previous 12 months. The figures have emerged in a startling report from the Association of Payment Clearing Services (Apacs), which shows how cunning criminals have become.

Thieves use sophisticated strategies to copy card details, including plastic devices placed over cash machine slots that skim data on the magnetic stripe and photograph your fingers as you type in a PIN number. Recent targets for this form of ATM fraud include Hammersmith Tube station in west London.

Other criminals rely on "shoulder surfing", loitering close by as you enter your PIN and then stealing your card.

Then there's the "Lebanese loop", a small hook that jams your card in the slot so you think there's a problem with the machine and walk away in frustration. That's when the fraudsters, who have watched you entering your PIN, re-emerge and withdraw your card, and your cash.

Nearly one in 10 of us now doesn't feel safe using cash machines, according to Apacs' research. And more than a third (38 per cent) who do feel secure say they are wary at night and in isolated areas.

ATM theft has become the fastest-growing form of card fraud, explains Apacs spokes- woman Sandra Quinn - more widespread than identity theft, where somebody assumes your personal details to apply for credit cards. As a proportion of all card fraud (also up over the past year, by 18 per cent to £478m), it has rocketed from 5.75 per cent in June 2002 to 12.76 per cent today.

This increase in criminal activity is believed to be linked to the advent of chip and pin, the new anti-fraud technology inside our plastic.

By this New Year's Eve, there should be some 36 million chip and pin cards in circulation; these do away with the magnetic stripes that are vulnerable to skimming and will instead allow transactions to be made only when users tap in a secret four-digit number. Lenders are banking on the technology to prevent fraudsters from accessing details stored on chips on both debit and credit cards. They aim to slash card fraud by as much as 80 per cent.

For their part, criminals are now trying to extract as much as they can from the current system while it lasts.

This new ATM vision is a long way from the essence of the hole in the wall, a beacon of convenience and a lifesaver when you're caught short for cash.

The first ATM appeared in the UK in 1967 and could be used only by Barclays customers. You had to debit your account in a bank branch in exchange for "fixed sum" tokens to put into the machine.

Times have changed since then, of course, but last week the industry reassured consumers that it was still safer to use a card than to carry cash, drawing up a "safe user" guide (see below) to raise awareness.

"The £61.1m losses represent less than 0.05 per cent of the £144bn safely withdrawn from cash machines last year," says Ms Quinn at Apacs. "Remember, if you are a victim of card fraud, you will not suffer any financial losses as long as you haven't acted negligently."

This is vital to ensure trust in ATMs: if you fall victim to a scam, the banks will foot the bill. Not only will you get your cash back, but lost interest on your account will be reinstated and any overdraft fines debited from your funds reimbursed.

The real pain is the inconvenience. It can take between 10 days and six weeks before fraud inquiries are cleared up, your bank balance is restored and a new card is sent out to you.

In the meantime, you'll only be able to get your hands on cash by queuing in bank branches and post offices, borrowing from friends or using credit cards with high interest charges in ATMs.

Banks are adopting their own security measures. Many have imposed a daily withdrawal limit, with £300 now standard across most banks, although Lloyds TSB stops at £200.

Other lenders have gone further. First Direct has repeatedly written to its heaviest ATM users suggesting that they think about different ways of getting hold of their cash.

In the summer, it reminded 100,000 customers that they could get cash back in supermarkets or use their Switch cards more in stores.

The bank says it was responding to customers' enquiries about money disappearing from their accounts.

Banks will always pay back the cash to customers unless they have proof that they have been negligent. This has worrying implications. For example, if somebody were to keep their PIN written down on a piece of paper and unfolded this each time they used an ATM, it might be construed as negligence if it continually helped people to defraud them.

But banks say that as long as you are not a deliberate part of any such fraud, negligence will probably not be an issue, though all cases are treated individually.

SECURITY STEPS

• Check bank statements regularly for any entries you don't recognise.
• If people act suspiciously near an ATM or you don't feel comfortable, go elsewhere.
• Don't use a machine that looks unusual or shows signs of tampering; report it.
• Never accept help or be distracted; shield the keypad.
• Dispose of receipts carefully, perhaps by shredding.

Source: Apacs