First Direct, the British online bank owned by HSBC, has written to its most regular cash machine users to tell them that they’re at risk of being defrauded, and that they should consider getting all their weekly cash out in one go.
Now, there are two types of ATM fraud: the type that involves dummy hardware, and the type that involves reading your PIN over your shoulder, hitting you with a cosh and nicking your card.
First Direct’s advice has no impact at all on the latter, more prevalent kind of fraud – it merely removes the “reading your PIN over your shoulder” step for the mugger-to-be.
It might have a limited impact on the first kind… but even here, the chance of being tricked by a stick-on keyboard is lower than the chance of having your wallet nicked.
Has First Direct taken leave of its senses… or is it being cynical? A customer’s bank is liable for most of the money defrauded from their account – and for none of the cash stolen from their wallet. If First Direct can try and ensure its customers shift their likely way-of-losing-money-to-criminals from fraud to mugging, then its own financial position is noticeably improved.
(also, why is the bank contacting the people who use cash machines most? Surely they’re *more* likely than average to notice strange add-on equipment, lurkers behind shoulders, etc…?)
The bank isn’t liable for cash lost by fraud at shops, either; at the moment, the merchants are, and with "chip and PIN", the idea is that the customers will be. It’s a risk shifting measure. So yes, cynical, but I don’t think the bank even cares about the muggers! (Note of course that First Direct doesn’t have any ATMs itself.)
That’s not entirely true: if the cardholder has a non-chip-and-PIN card and is present in the shop, then the bank is liable.
If the cardholder has a chip-and-PIN card and storekeeper has a chip-and-PIN machine, then the bank can also be considered liable-ish – although they’d doubtless claim that because their system is infallible, the customer must be negligent…
Yeah, the latter is the important point. Also, I thought the banks were changing contracts with merchants so that non-chip-and-PIN transactions weren’t covered by the insurance which banks offer merchants against fraud.
There’s a third method: do you remember that story when some people stole a digger and did a ram-raid on an ATM machine?
Not really fraud, though.
Some morons ramraided the HSBC branch at Salfor Uni when I was there many years ago. Unfortunately for them, they stole the Bank Statement machine instead of the ATM…
I visited NATWEST today to make enquires about Chip & Signature Cards. (I can never remember seldom used numbers, and refuse to write PINs down, even disguised as I could be liable for fraud committed on my card).
At first they denied having such a thing as a Chip & Signture Card until I pressed. The outcome was they considered my short term memory for seldom used numbers entitled me to a Chip & Signature Card.
Two other card issuers mention these cards on their web sites. IMHO both are a wee bit misleading, judge for yourself:
Egg:
Do I have to have a Chip and PIN card?
Yes. All your credit and debit cards will gradually be replaced with Chip and PIN cards over the next two years. If you feel there are circumstances why you cannot use a Chip and PIN card and you’d like to be issued with a Chip and signature Egg Card instead, please get in touch. We can review this on an individual basis.
Nationwide
Chip and PIN technology and disabled people
Chip and PIN technology will have benefits for many disabled people. However, a small number of people may find it difficult, or impossible, to use a PIN. Customers in this position may request a Chip and Signature card to allow them to use their debit or credit cards without the use of a PIN. This card will allow people to continue to authorise transactions by signature. If a disability prevents you from using a PIN, please ask for a Chip and Signature card. Your local branch will be pleased to help you, or contact Nationwide’s Call Centre on 08457 30 20
James