Some ATMs to retract cash to tackle fake shutter overlay fraud: RBI

Dec 5, 2024

Synopsis
The Reserve Bank of India is partially reactivating ATM cash retraction, a feature disabled in 2012 due to fraud. This move combats a new "fake shutter overlay" scam where criminals trap dispensed cash. The reinstated retraction aims to give customers a better chance of recovering their money from compromised machines, focusing on ATMs susceptible to this fraud.

The Reserve Bank of India has partially reversed an earlier order to disable cash retraction facility in ATMs. The facility was originally disabled in January 2012 due to concerns over fraud.

Cash retraction facility refers to the built-in feature in ATMs where the machine pulls back currency notes if the customer does not collect them from the dispenser in time.

Previously, when the machines retracted cash, server logs recorded that the dispensed cash was retracted. However, fraudsters exploited this feature by picking up some of the cash, causing the machine logs to record a cash retraction.

Disabling this feature put an end to such frauds.

In the past year, a new fraud has emerged. This is called the fake shutter overlay fraud. Criminals attach a fake cover over the ATM's cash dispensing slot, which traps the dispensed cash. They then retrieve the cash after the customer leaves thinking the transaction has failed.

By re-enabling cash retraction, customers have a better chance of retrieving their cash if the machine is targeted by fraudsters.

NCPI has written a letter to all members of the National Financial Switch, which manages India's ATM network, stating that after discussing solutions to the fake shutter overlay fraud, industry members, banks and ATM companies, submitted their recommendations. These were passed on to RBI.

Bankers said that the retraction facility will be introduced only in those ATMs that are susceptible to fraud.

[The Economic Times]