News

British bank asks customers to limit ATM usage

July 5, 2004

LONDON - First Direct, an online British bank, is asking its customers to reduce their ATM usage to help combat soaring card fraud.

First Direct sent mailings to more than 110,000 people urging them to limit their use of ATMs to once a week, according to an Evening Standard report.

"Making frequent cash withdrawals from ATMs increases your exposure to fraud. You may find it more convenient to make a single withdrawal to cover your cash needs for the week ahead," read a letter from the Internet and phone banking firm.

First Direct targeted the 10 percent of its clients who use ATMs most frequently in its controversial mailing two weeks ago.

The letters also encouraged them to make more use of cashback facilities in shops and to use debit cards to pay for goods instead of cash. Some industry watchers accused the bank of trying to increase its own income by encouraging the use of debit, since it receives interchange fees from retailers for debit purchases. First Bank must pay interchange to ATM owners when its customers use the machines.

First Direct insisted it was merely trying to raise awareness of the dangers of card fraud among its one million customers.

"Every time you use a machine there is a small risk that you will fall victim to it," said spokeswoman Annette Spencer. "We have asked people to think about using their debit cards to make payments -- they don't always need to use cash -- and to think about the fact that many retailers now offer cashback facilities.

"The spirit in which this was sent was one of customer service. We are known for going the extra mile for our customers and this is the same as warning them against Internet fraud -- high usage of ATM machines increases the risk of fraud. We would not presume to dictate to our customers what they should do," she said.

First Direct denied that it had any interest in persuading people to avoid ATMs to save money, according to the Evening Standard.

Detective Inspector Tony Thomas, from the UK's Dedicated Cheque and Plastic Crime Unit (DCPCU), said in an interview with BBC Radio 5 Live that he disagreed with First Direct's advice: "I don't support it. We should not be giving in to these criminals. Yes, we need to be careful but we need to keep it in perspective."

"To carry large amounts of cash around with us is creating new risks," Thomas said.

The UK's Association for Payment Clearing Services has estimated that card fraud is a £39 million (U.S. $71.8 million) a year problem in the UK.