Collective effort required to curb fraud – Institutions, law agencies and public need to collaborate

Crime syndicates are opportunistic and continually adjust their tactics to take advantage of any opportunities to get their hands on bank client’s money be it via a cash robbery, stolen card data or solicited confidential information. This was one of the views of SABRIC, the South African Banking Risk Information Centre, with the release of the banking industry’s annual crime stats for 2018.

The results show that combined gross card fraud losses on South African issued cards saw an 18% increase from 2017 to 2018, totalling R873 394 351, with credit card fraud increasing by 18.4% and debit card fraud increasing by 17.5%. “We are concerned about some of the increases, which clearly reflect that criminals will take every opportunity to get their hands on bank customers’ money,” SABRIC CEO, Kalyani Pillay said.

In 2018, 23 466 incidents across banking apps, online banking and mobile banking amounted to almost R263 million in gross losses. Incidents across these platforms increased by 75.3%. Mobile banking incidents showed an increase of 100%, with gross losses just short of R29 million, while online banking incidents showed an increase of 37.5% with gross losses of about R129 million. Banking app incidents increased by 55.4%, with gross losses of approximately R105 million for the same period. SIM swops in the Mobile Banking space saw an increase of over 200% to 11 077 incidents.

Alarming statistics, but as Pillay notes: “To have any significant impact on the fight against all of these crimes, the collective efforts of banks, bank customers and law enforcement agencies are imperative.”

The validity of this statement is clearly reflected in an internet fraud case that was recently resolved when the FAIS Ombud was able to facilitate the successful resolution thereof by way of a conciliated settlement.

Web trading internet fraud

During the period 31 January 2018 and 26 February 2018, the complainant was the victim of Internet-fraud, committed by an entity behind a web trading platform. According to the complainant he had been misled by the entity which claimed that it was appropriately regulated, that his funds would be kept in a segregated account and that he would participate in real-time trading. However, all this turned out to be false, and the complainant sustained losses as a result of the capital invested.

As a result, the complainant approached the bank (the respondent) for assistance in providing information about the name of the acquiring bank and/or financial institution for the transactions concluded, so that the complainant and his legal representatives could enter into direct communication with it. The bank was unwilling to assist the complainant and the complainant approached the FAIS Ombud’s office as he believed that the respondent’s refusal to provide the required information has hindered the possibility of him adequately protecting his interests.

FAIS Ombud intervention

The Ombud’s office contacted the respondent and asked them to consider, in the spirit of treating customers fairly, to utilise its significant resources to assist the complainant with the required information which the average man in the street would not have access to, and which would allow the complainant to further his attempts at reclaiming his funds.

The outcome

The respondent, to its credit, agreed that assisting the complainant would be in the spirit of treating customers fairly and agreed to investigate the matter on his behalf.

Additional information was requested from the complainant and after a thorough investigation by its fraud investigation unit, the respondent was able to provide the complainant with the merchant’s details.

The complainant informed the Ombud’s office that the respondent had adequately assisted him and confirmed that the matter had been resolved to his satisfaction.

“Whilst this Office does appreciate that it may not always be possible to facilitate compensation for such matters, financial institutions such as banks, with the resources at their disposal, could offer assistance in empowering the complainant with information that will allow the affected individual to rectify the situation. This can only be done where these institutions fully commit to the essence of treating customers fairly as detailed above, something that this Office is committed to fostering in a cooperative manner”, the FAIS Ombud’s office concluded.

SABRIC’s banking crime statistics enable banks to deploy effective risk mitigation strategies as well as help make the public aware of how criminals are targeting them. “If we want to beat bank-related crime, we, unfortunately, must accept that as individuals, we also have the responsibility to protect our money and hopefully in doing so, will help to spread the word to others. We certainly have a moral duty to help each other and contribute to restoring confidence in our communities and in turn our country”, the Executive summary of SABRIC’s reports states.

Click here to access the SABRIC Annual Crime Stats 2018 publication.

Be your money’s best protection by following tips provided by SABRIC – click here to download tips for you and your client.

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