Are banks making it too easy for online fraudsters to open bank accounts for their ill-gotten gains?
Card swapping at ATMs appears to be how most “banked” South Africans are currently being caught by criminals.
Every year a snapshot of bank crime trends is provided by the ombudsman for Banking Services’ annual report.
The latest report (2014), released on Friday shows that complaints about ATMs still make up by far the bulk of complaints, and were 7% up on the previous year, but it was card swapping at ATMs which showed the most dramatic leap – from 27% of ATM complaints in 2013 to a whopping 60% last year.
How is it done? Criminals distract ATM users as they enter their PINs, then press cancel, whip the card out and replace it with another. Then off they go with the card and the PIN.
And here’s the bad news for victims of ATM fraud: of the 1768 complaints which consumers made against their banks last year, the ombudsman’s office found in favour of the bank in 79% of cases.
In other words, only one in five (21%) of those who lodged a complaint against their bank’s handling of their fraud complaint, got a ruling in their favour, based on some form of negligence on the part of the bank concerned.
Overall, the percentage of cases settled in favour of the consumer was down quite significantly on the previous year’s: in 2013, 40% of cases were decided in the consumer’s favour, compared to last year’s 31%. One of the reasons for that, said ombudsman Clive Pillay, was “the impasse reached on a particular internet banking issue”.
“This matter is currently before a judge as a test case,” Pillay wrote in his report, “and if the judge finds that there is indeed a duty of care on a beneficiary bank when opening an account, then it is likely that 19% more awards would be made to consumers for cases closed pending the outcome of the test case, bringing that total to 50%.
Pillay was referring to allegations, made frequently by victims of internet banking crime, that banks don’t do enough to prevent fraudsters from opening accounts into which the proceeds of their crimes are deposited and then hastily withdrawn.
The ombudsman’s office is in dispute with certain banks over this issue.
Justice Malan has since found that there ought to be a duty of care on the beneficiary bank, but, Pillay said, the judge felt that the only way to crystalise this duty of care would be to hear oral evidence before making a finding.
“That would require the initiation of a court case and we have not yet decided on how best to approach the matter.
“One of the possibilities we are considering is amending our terms of reference so as to enable us to investigate whether both banks – the bank where the fraud occurred as well as the beneficiary bank – have complied with the duty of care and are not guilty of any negligence or maladministration.”
Any move aimed at getting the banks to take more responsibility for enabling internet banking fraud is to be welcomed.
In the meantime, don’t click on any link in any “Dear Customer” email claiming to be from your bank, SARS, UCount rewards and the like. Ever.
CONTACT: E-mail: consumer@knowler.co.za or Twitter: wendy@knowler
Debit orders gone wrong
SO YOU never let your cards out of your sight, always shield the ATM keypad when you’re punching in your PIN; you’re wise to phishing emails and don’t give your banking details to anyone who calls, right? The bad news is that your bank account could still be plundered.
People employed by legitimate companies download their debit order payment lists – with all their customers’ personal information, including their bank account details – and sell them to fraudsters, who pay a debit order processing company to liaise with the respective banks to set up debit orders, usually for small “under the radar” amounts. Then they sit back and let the money roll in.
Only when an account holder notices the debit and complains does the bank request proof of consent.
When the company can’t provide it, an “admin error” is often blamed – and one Durban company infamously went as far as faking an entire telesales call recording. The Payments Association of South Africa (Pasa) is working hard to crack down on this scourge, and currently has almost 150 repeat offenders on its Debit Order Abuse List – meaning they can’t have debit orders processed by any South African bank.
The really good news is that Pasa is pioneering a mechanism to get electronic approval, probably via SMS, from account holders for every debit order before it is processed.
It will begin later this year with the most fraud-prone non-authenticated early debit orders, used mainly by banks and insurance companies to whip money out of your account shortly after your salary has been deposited, then roll out to all other debit orders.
Always report debit order fraud to Pasa: pasa@pasa.org.za
Fraudsters lurk at ATMs
Card swapping at ATMs appears to be how most “banked” South Africans are currently being caught by criminals.
Every year a snapshot of bank crime trends is provided by the ombudsman for Banking Services’ annual report.
The latest report (2014), released on Friday shows that complaints about ATMs still make up by far the bulk of complaints, and were 7% up on the previous year, but it was card swapping at ATMs which showed the most dramatic leap – from 27% of ATM complaints in 2013 to a whopping 60% last year.
How is it done? Criminals distract ATM users as they enter their PINs, then press cancel, whip the card out and replace it with another. Then off they go with the card and the PIN.
And here’s the bad news for victims of ATM fraud: of the 1768 complaints which consumers made against their banks last year, the ombudsman’s office found in favour of the bank in 79% of cases.
In other words, only one in five (21%) of those who lodged a complaint against their bank’s handling of their fraud complaint, got a ruling in their favour, based on some form of negligence on the part of the bank concerned.
Overall, the percentage of cases settled in favour of the consumer was down quite significantly on the previous year’s: in 2013, 40% of cases were decided in the consumer’s favour, compared to last year’s 31%. One of the reasons for that, said ombudsman Clive Pillay, was “the impasse reached on a particular internet banking issue”.
“This matter is currently before a judge as a test case,” Pillay wrote in his report, “and if the judge finds that there is indeed a duty of care on a beneficiary bank when opening an account, then it is likely that 19% more awards would be made to consumers for cases closed pending the outcome of the test case, bringing that total to 50%.
Pillay was referring to allegations, made frequently by victims of internet banking crime, that banks don’t do enough to prevent fraudsters from opening accounts into which the proceeds of their crimes are deposited and then hastily withdrawn.
The ombudsman’s office is in dispute with certain banks over this issue.
Justice Malan has since found that there ought to be a duty of care on the beneficiary bank, but, Pillay said, the judge felt that the only way to crystalise this duty of care would be to hear oral evidence before making a finding.
“That would require the initiation of a court case and we have not yet decided on how best to approach the matter.
“One of the possibilities we are considering is amending our terms of reference so as to enable us to investigate whether both banks – the bank where the fraud occurred as well as the beneficiary bank – have complied with the duty of care and are not guilty of any negligence or maladministration.”
Any move aimed at getting the banks to take more responsibility for enabling internet banking fraud is to be welcomed.
In the meantime, don’t click on any link in any “Dear Customer” email claiming to be from your bank, SARS, UCount rewards and the like. Ever.
CONTACT: E-mail: consumer@knowler.co.za or Twitter: wendy@knowler
Debit orders gone wrong
SO YOU never let your cards out of your sight, always shield the ATM keypad when you’re punching in your PIN; you’re wise to phishing emails and don’t give your banking details to anyone who calls, right? The bad news is that your bank account could still be plundered.
People employed by legitimate companies download their debit order payment lists – with all their customers’ personal information, including their bank account details – and sell them to fraudsters, who pay a debit order processing company to liaise with the respective banks to set up debit orders, usually for small “under the radar” amounts. Then they sit back and let the money roll in.
Only when an account holder notices the debit and complains does the bank request proof of consent.
When the company can’t provide it, an “admin error” is often blamed – and one Durban company infamously went as far as faking an entire telesales call recording. The Payments Association of South Africa (Pasa) is working hard to crack down on this scourge, and currently has almost 150 repeat offenders on its Debit Order Abuse List – meaning they can’t have debit orders processed by any South African bank.
The really good news is that Pasa is pioneering a mechanism to get electronic approval, probably via SMS, from account holders for every debit order before it is processed.
It will begin later this year with the most fraud-prone non-authenticated early debit orders, used mainly by banks and insurance companies to whip money out of your account shortly after your salary has been deposited, then roll out to all other debit orders.
Always report debit order fraud to Pasa: pasa@pasa.org.za
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