Beware of the OTP Scam: Protecting Your Bank Account from Unauthorised Transactions

One-time passwords (OTPs) via SMS provide an extra layer of security for many sensitive transactions. However, cybercriminals are now using OTPs to facilitate illegal withdrawals & transfers from unsuspecting bank account holders.

In this comprehensive guide, we’ll break down what an OTP scam is, educate you on variations of this fraud, provide tips to recognise warning signs & action steps to take if you are victimised. Arm yourself with knowledge so you can protect your hard-earned money.

What is the OTP Scam?

The OTP scam involves fraudsters gaining access to a bank customer’s account, requesting an OTP-protected transaction & then tricking the victim into providing that one-time password. This grants them temporary access to approve illegal transfers out of the account.

Here is how the OTP scam typically operates:

• Hackers gain account login details through phishing, malware or social engineering.
• Logs into bank site & initiates funds transfer to own account.
• The bank sends OTP to the consumer’s registered mobile number.
• The scammer contacts the victim posing as bank security & gets them to share the OTP.
• OTP allows scammers to authorise the fraudulent transaction.

Once the transfer goes through, the stolen money quickly disappears making recovery very difficult. Some variations involve the fraudster registering their mobile number with the bank to receive the OTP directly. But most OTP scams rely on tricking the customer into handing over the password themselves.

OTP Scam Warning Signs

Watch for these common red flags that indicate an OTP scam is underway:

• Receive an unexpected OTP with no context from your bank.
• Soon after, get a call claiming to be bank security requesting the code.
• The caller insists the OTP is needed to block potential “suspicious activity” in your account.
• May pretend there was a data breach requiring account verification via OTP
• Pressures you for the code claiming emergency measures to protect your money.
• If you provide the OTP, you soon detect unauthorised withdrawals from your account.

The scam succeeds by catching people off guard with the urgency of the unexpected call requesting sensitive information. But no legitimate bank will ever call out of the blue asking for your confidential OTP.

OTP Scam Variations

Fraudsters constantly adapt their methods to steal OTPs. Here are some common variations:

Phishing Emails & SMS

• Phishing messages pose as the bank, claims your account is locked & provides a fake site to enter OTP.
• With details harvested, scammers access real accounts & initiate transfers.

Fake Bank Apps

• Malware loads a fake version of your bank’s app which can intercept OTPs
• Requests permissions like accessibility to bypass OTP protections.

SIM Swap Scam

• A scammer calls the carrier pretending to be you, reports the SIM lost/stolen & transfers the number to a new SIM.
• Intercepts OTPs from the bank to authorise transactions & drain the account.

Shoulder Surfing

• Peering over your shoulder in public to observe PINs typed or OTPs received.
• With login details, the scammer can access the account & steal money.

Remote Access Apps

• Call pretending to be tech support, guide you to install an app like AnyDesk for “assistance”.
• Takes remote control of the device to intercept bank texts & emails.

Stay vigilant against any communication requesting sensitive account information like OTPs. These scams can drain bank balances incredibly fast.

Protecting Yourself from the OTP Scam

Here are smart tips to help safeguard your money & account security:

• Never share OTPs with anybody, including bank staff. Real banks will never ask.
• Avoid calls from unknown numbers. Let it go to voicemail first so you can verify.
• Contact the bank immediately if you receive an unexpected OTP transaction with no context.
• Use strong unique passwords for banking apps & change periodically.
• Enable two-factor authentication (2FA) via OTP on your bank account if available.
• Regularly monitor account activity closely for unauthorised transactions.
• Only download the bank’s official app from the Apple App Store or Google Play Store.
• Cover PIN pad when accessing bank accounts in public places.
• Never call back numbers left in suspicious voicemails requesting personal information.
• Never provide any access to your device, credit cards or accounts if receiving a cold call for “support”.

Remaining vigilant against scams aiming to steal your confidential banking login details & OTPs will help keep your finances secure.

What To Do If You Share an OTP with Scammers

If you realise you have inadvertently provided an OTP to fraudsters, take these steps immediately:

• Call your bank right away to report unauthorised transactions in progress. They may be able to freeze the account.
• Change online banking passwords & avoid using any saved password autofill for the compromised account.
• Inform the bank if you suspect your computer is infected with malware like a fake bank app intercepting OTPs. They may suggest a device wipe.
• Request new card & account numbers from the bank to fully close compromised accounts.
• Monitor account statements meticulously for signs of further suspicious activity indicating identity theft.
• Contact mobile carriers to suspend service on compromised SIMs. Obtain a new SIM with the same number to regain control.
• File a police report about the OTP scam providing all details of the interaction & losses. This creates an official record.
• Change passwords on other sensitive accounts in case the scam gathers passwords or login details from your device or accounts.

Acting quickly can limit financial losses from OTP scams. But always contact your bank first to secure your accounts if you share an OTP with any unknown party.

Reporting Scams to Protect Others in India

If you encounter an OTP scam, be sure to report it:

• File a complaint with the Indian Cyber Crime through online their website or by calling 1930.
• Report the caller/number as a Scam on Truecaller and other Caller Identification Apps.
• Notify your mobile carrier of the SMS scam. They may be able to block further messages.
• Warn friends, family & followers on social media to help prevent further victims.

The more widely scams are reported, the better chance there is of disrupting the criminals perpetrating them. Make reporting an OTP scam a priority.

Key Takeaways to Protect Yourself from OTP Scams

Keep these core tips in mind to identify & avoid OTP scams:

• Never share OTPs with anybody, including those claiming to be bank staff. Real banks don’t ask for OTP codes.
• Watch for unexpected OTP texts with urgent calls requesting the code to “protect your account”. This is a scam tactic.
• Enable two-factor authentication (2FA) on bank accounts which requires OTP to approve transactions.
• If you provided an OTP to scammers, immediately contact your bank to freeze your account & reverse any transfers.
• Closely monitor accounts for unauthorised transactions indicating identity theft from a scam.
• Report OTP scams to banks, mobile carriers, police, & organisations like the FTC to protect others.

Staying vigilant against scams aiming to trick you into sharing your confidential OTP codes will help keep your finances safe from fraud.

Frequently Asked Questions about OTP Scams

What should I do if I receive an unexpected one-time password text from my bank?

If you receive an OTP without initiating any transaction, contact your bank immediately to report it & check for fraudulent activity. Avoid calling any other numbers claiming your account is compromised.

How do scammers get my mobile number associated with my bank?

Scammers who have gained access to your online account details can update the mobile number to their SIM. Or they use social engineering to get mobile carrier reps to port your number to a new SIM card they control.

Is it ever okay to share a one-time password with someone who says they are from my bank?

No, it would be best if you never shared OTPs regardless of who the caller claims to be. Legitimate banks will never ask for the actual codes. Treat OTPs as confidential as passwords.

What’s the best way to avoid getting scammed into sharing OTPs?

Being vigilant against unexpected texts & calls related to your bank account is key. Never call numbers or click links in suspicious texts – go directly to your bank’s website or call the number on the back of your credit/debit card.

Should I be worried about identity theft if I provided scammers with an OTP code?

Yes, providing OTPs can allow criminals access to your private account details, which frequently leads to various forms of identity theft. Carefully monitor all your accounts & credit reports & consider requesting new account numbers from your bank.

What can banks do to better educate customers about OTP scam risks?

Banks should emphasise that OTPs are confidential & explain exactly when texts will be sent. Training on phishing risks & emergent scam tactics also helps. Make customers aware that banks will never call requesting sensitive information unexpectedly.