Authorities in the Indian states of Punjab and Kerala are investigating an ATM fraud carried out by thieves who exploited a weakness in the design of some ATMs.
Police have so far arrested six men in connection with the crime; the men have admitted to stealing 2 crore ($350,877) from the ATMs of several banks, said a story at India Times.
The scheme described by the Times was a fairly simple one: The ATM user would make a withdrawal, but would leave a few banknotes behind when the cash was dispensed. The remaining notes would be retracted and the machine would log a failed transaction. Because the machine was not capable of counting the reclaimed currency, the system would credit the entire transaction amount back to the user's bank account.
Several banks have changed their ATM design to prevent the fraud, but many machines still remain vulnerable to what the Times described as a "transaction reversal" fraud.
"The surge of such fraud occurred in late March and April," said TS Jagadeesan, chief general manager of Federal Bank, which lost 75 lakh ($131,578) in the scam. "That is when it came to our attention. We have subsequently scrutinised all transactions and filed more than 30 police cases across the country."
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