How to avoid being scammed at the ATM

An acquaintance of mine had his bank card and pin number stolen at a restaurant in Cape Town. He’s not sure how it happened – collusion by the restaurant staff or a sophisticated technological effort by outsiders – but his pin and card number were nicked. When he woke up in the morning, his phone was full of texts documenting the quick work the thieves made of his account; he was completely cleaned out. Tens of thousands of rands vanished overnight, and he was left to fight a long battle with the banks over the theft.

The lesson of this story is that you really don’t want this to happen to you. In this interview, banking specialists outline some of their tips for avoiding being scammed at the ATM, which is apparently the most fertile hunting ground for bank detail thieves. The bottom line? Stay alert, do not accept help from strangers, and always cover the pin pad when you’re entering your number. – FD 

ALEC HOGG:  The Reserve Bank fined the country’s top four banks a total of R125m over what it calls ‘lax, anti-money laundering controls’.  That happened last week.  Well, there’s that and a whole lot of interesting things going on with ATM’s where South Africans feel that they are being dispossessed of their funds – not just by fraudsters, but also by the banks.  Kalyani Pillay, who is the CEO of Sabric and Clive Pillay, Banking Services Ombudsman, are with us in the studio.  Any relation…?

 

KALYANI PILLAY:  No.

 

ALEC HOGG:  No, same surnames, but no relation.  I guess some people will be relieved to hear that.

 

KALYANI PILLAY:  We have a good working relation, so there are some relations.

 

ALEC HOGG:  When you say ‘good working relations’…

 

KALYANI PILLAY:  Clive, being the Banking Ombudsman and me, being with Sabric.

 

ALEC HOGG:  But you’re both on the same side of the fence.  What’s the working relationships like with the banks themselves?

 

KALYANI PILLAY:  Very good.  We’re owned by the South African banks and we help them fight all…

 

CLIVE PILLAY:  I think it’s very important that your viewers understand that I’m a Banking Ombudsman, so we adjudicate disputes between banks and their customers.  We do that impartially, independently, and confidentially, so we are neither…

 

ALEC HOGG:  So neither of you are on my side of the fence.  You’re owned by the banks and you’re impartial.

 

CLIVE PILLAY: Absolutely.

 

ALEC HOGG:  But don’t you tend to maybe support the consumers more?  Wasn’t that the purpose of creating an ombudsman in the first place?

 

CLIVE PILLAY: Well, not really.  We guard our independence zealously.  We investigate a matter, we assess the evidence, and if the evidence tends to suggest that the banks are at fault, we make such a finding.  On the other hand, if the evidence tends to suggest that the consumer is at fault, we make such a finding.  We are scrupulously impartial and independent.

 

ALEC HOGG:  To whom do you report?

 

CLIVE PILLAY: I report to an independent board of directors, the majority of whom are made up of non-banking people.

 

ALEC HOGG:  So if we have a problem with one of your findings, we will go to that board of directors (of non-banking people) and engage with them.

 

CLIVE PILLAY: Absolutely.

 

ALEC HOGG:  It’s not that there’s a problem with it.  It’s just a point.  Kaylani, the R125m fine.  When talking to the banks themselves, they say ‘really, they’re promoting organised crime in this regard.  It’s just incompetence in certain areas.  When you have 40-thousand people working for you, it’s not easy to get everyone to be competent’.  R125m is a big fine, even for big organisations.  What’s your take on it?

 

KALYANI PILLAY:  Unfortunately, the banking association is the organisation to talk with.  We deal with organised crime, but not in respect of money laundering.  My take on the matter is that it really was an issue around non-compliance, more from an administrative and probably from a FICA side.

 

ALEC HOGG:  But ‘non-compliance from an administrative side’ confirms what the banks were saying to us in that they felt it was a little harsh.  If you catch somebody doing something naughty, throw the book at them but if your administration is a little bit lax, is it really going to open the door for criminals?

 

KALYANI PILLAY:  No, I think that issues around compliance will definitely improve and strengthen that area, but I think the banks have sufficient measures and mechanisms in place to be able to detect any suspicious transactions, and to be able to deal with it.  From my side, I don’t think there was any way the banks would not be in a position to deal with it.

 

ALEC HOGG:  It’s a lot of money – R125m.

 

KALYANI PILLAY:  It is.  It’s a significant amount of money.

 

ALEC HOGG:  And the regulations are another subject entirely.  Clive, you’ve just brought out your annual report.

 

CLIVE PILLAY: That’s right.

 

ALEC HOGG:  It’s interesting to see that ATM’s are an issue, that consumers are feeling uncomfortable with them.  The complaints on ATM have gone up substantially in this past year.  What’s behind it?

 

CLIVE PILLAY:  I think it’s probably attributable to a number of factors.  One factor certainly is the fact that consumers are more aware of the Internet banking scams whether those scams purport to come from SARS, the banks, or ABC Holiday Resorts.  Consumers are more aware of that and more wary of that, so they tend to not click on the link,  In turn, fraudsters have elected to go to ATM’s which, I think, they perceive as easier pickings.

 

ALEC HOGG:  Is it organised or is it opportunistic – the fraudsters who go to the ATM’s?

 

KALYANI PILLAY:  Oh no, it’s definitely organised.  It’s definitely organised because they know exactly what they’re doing.  You get all types of crimes related to ATM’s.  One of them is ‘shoulder surfing’, which is quite a common thing, especially where the perpetrators offer assistance to a person using an ATM.  They may jam the ATM – the mouth reader – so that the card doesn’t go all the way in and then they offer assistance.  In that way, they ensure that they do a card swap or they do a card skim and they are able to obtain the pin number when the person’s putting it in.  Alternatively, you find – where you don’t even know – is if you don’t cover the keypad (which is why we say to everybody ‘you absolutely have to cover the keypad), is that if there’s an ATM mounter scheming device on the machine already – which is a very tiny device on the mouth reader…  When the card goes in, it copies the magnetic strip data and then there should be another piece of device somewhere on the machine, which is also not very visible to the eye.

 

ALEC HOGG:  How big is the skimming device?

 

 

KALYANI PILLAY:  The skimming device…  If you take the magnetic strip, the magnetic strip is about this wide…  You almost put a square on the strip.

 

ALEC HOGG:  That’s all you need.

 

KALYANI PILLAY:  It’s a little device, which goes into the mouth readers.  It usually goes into another device, which is placed over it to make it look like that, so it skims/copies the data.  The camera itself is a very flat tiny piece of equipment.  What the perpetrators do is they manufacture a piece of the ATM that looks exactly like the ATM, they stick it behind, and a little pinhole is where the lens of the camera focuses through.

 

ALEC HOGG:  So this is organisation and not opportunism.

 

KALYANI PILLAY:  It’s highly organised.

 

ALEC HOGG:  What is your reaction to this kind of thing Clive, when you get complaints related to this kind of organised crime?

 

CLIVE PILLAY: The banks have undertaken in the Code of Banking Practice, to provide safe and secure banking and payment systems.  When an ATM is tinkered with at that level of sophistication where you can’t see it and won’t see it with the naked eye, it will be unreasonable to expect the average consumer to discern the tinkering.

 

ALEC HOGG:  So you would – in that case – go with the consumer.  I’ve been told (in my ear) that we’ve run out of time, but I have to ask you what the Lebanese loop is.  Does it have anything to do with the South of Johannesburg?

 

KALYANI PILLAY:  It’s a device, placed inside, so that when the money goes into the machine, it falls onto this device, and so you don’t get your money out, but the perpetrators know how to remove it later.

 

ALEC HOGG:  The Lebanese loop.

 

CLIVE PILLAY: The Lebanese loop has two components: a strand with wire and black X-Ray quality plastic.  The plastic is inserted in the mouth of the machine, which means the machine can’t read the information on the magnetic strip, and you’ll walk away thinking your card was swallowed.  The wire is then used to retrieve the card and ‘Bob’s your uncle’. 

 

ALEC HOGG:  Jeepers creepers, it’s interesting what names have come through.  Again, we’ve run out of time, but one little bit of advice for me next I go to an ATM so that I’m not scammed?

 

KALYANI PILLAY:  Don’t take any help from anybody at an ATM under any circumstances, even if they’re wearing clothes with the banks’ logos on it, because that’s what the perpetrators do, and never ever forget to cover the keypad at the ATM.

 

CLIVE PILLAY: Exactly that.

 

ALEC HOGG:   Well, we got two for the price of one.  Thank you very much for coming through today to CNBC Africa.  That was Kalyani Pillay, CEO of Sabric and Clive Pillay, Banking Services Ombudsman – no relation.  After the break, we take a look at how far we have come in 20 years of democracy.  Stay tuned.