An Automatic Teller Scam

The proliferation of automatic teller machines (ATM’s) prompted criminals to find ways to put them to their own use. One New York City bank, for example, placed pairs of ATM’s in the lobbies of its branches, along with a telephone linked to a clerk who answered questions about the new machines. A depositor wanting to use an ATM would often find another “customer” already present, talking on the phone. Before the depositor finished his transaction, the other person would say that the clerk had just told him the depositor’s ATM was malfunctioning, but the other was working. Unsuspecting, the customer would take his card from the first ATM and move over to the other.

The phone user would then surreptitiously watch the customer punch his personal identification number into the second machine and make a note of it. When the depositor had completed his transaction, the thief would say that the clerk wanted the depositor to insert his card in the supposedly malfunctioning ATM so that bank officials could figure out what was wrong. In complying, the depositor would activate the ATM — enabling the thief, once the depositor left, to use the victim’s identification number to withdraw money from his account.

This scam cost New York bank patrons many thousands of dollars before it was discovered. At first the bank refused to ‘ take responsibility, contending that it was up to its customers to exercise due caution in the use of the automatic tellers. New York State’s Attorney General disagreed and threatened suit against the bank under the Electronic Funds Transfer Act. The bank finally agreed to make restitution to the victims, and to pay interest on the funds fraudulently withdrawn. The bank hastened to adjust the machines so that it was no longer possible to work the scam. But all banks in the United States may not have taken this precaution, so beware…