Be careful when and where you swipe!
Credit card fraud remains a major challenge to the banking industry. The South African Banking Risk Information Centre (Sabric) revealed on Tuesday, 24 November 2009, that financial losses due to credit card fraud were 5% higher in 2009 than the previous year. This doesn’t sound like a massive increase until you consider the substantial 30% surge in this form of crime between 2007 and 2008. The latest statistics show a significant shift in the types of credit card fraud committed too.
For the period July 2008 to June 2009 credit card fraud losses increased (compared with the same period in 2007/08) by 5%, to R443m. The bulk of banking industry financial losses (some 89% of the total) occurs in Gauteng, the Western Cape and Kwazulu-Natal, broadly in line with levels of economic activity. And – while the majority of fraud with South African bank-issued credit cards still takes place within our borders – there’s an alarming increase (+23% to R145.8m) of cross border fraud. Chief executive of Sabric, Kalyani Pillay says, “the successes achieved throughout the country this year in bringing down card fraud incidents are noticeable, but the banking industry remain vigilant and continues to educate customers about the role they can play to mitigate fraud.”
Types of credit card fraud
The fraudulent credit card transactions tracked by Sabric fall into a variety of categories. Counterfeit Card Fraud occurs when criminals combine an illegally manufactured card with information stolen from your genuinely issued card. Criminals can also populate old stolen credit cards in this way... The most popular technique for stealing information is through skimming, which is the copying of encoded information on the credit card’s magnetic strip using a card reader. This process usually takes place at a pay point – for example restaurants – where the card leaves the owners possession for short periods of time.
Another popular type of credit card fraud is called False Application Fraud. This typically involves a criminal falsifying a credit application and then completing transactions with the illegally obtained card. South African banks have invested heavily in technology to identify such false applications, but you can do your part by protecting your public information! Don’t leave identity documents, payslips, municipal rates accounts, passports, cheque books, internet banking profiles or bank account details lying about. And shred (or completely destroy) this type of document before you dispose of it. Lost Card Fraud involves transactions on a validly issued card shortly after it was ‘lost’ by the cardholders – while Stolen Card Fraud refers to fraudulent transactions with a valid card stolen from its legitimate owner.
Don’t become a victim!
There are many ways to avoid being a victim of card fraud. You need to report lost or stolen cards to your bank immediately. “Sabric advises bank clients to have their banks’ lost and stolen card hotline number handy to be able to report incidents in good time,” Pillay said. Other good advice is not to carry too many cards with you and to check your bank accounts and credit card statements thoroughly for any suspicious transactions or other irregularities. Further good advice is to never let your credit card out of your sight while completing a transaction. You should avoid lending your credit card to family, friends or colleagues too. Remember – the skimming of credit cards remains the preferred method to ‘steal’ personal information to manufacture fraudulent cards. It only takes a couple of seconds for someone to swipe your card through a card reading device, and you’re usually none the wiser!
Another form of bank fraud that’s on the increase is Internet bank account fraud. Sophisticated criminal syndicates Send out millions of emails in an attempt to lure unwitting internet banking clients to compromise their internet banking profiles. These emails typically warn you of some form of problem with your bank account. If you respond to the email you are usually linked to a false website (an exact copy of your bank’s site) and encouraged to log in… But instead of logging in to your bank account you are providing criminals with your account details!
You should never reveal your bank account passwords to anyone – and NEVER respond to emails encouraging you to confirm your bank login username and password. Banks will NEVER ask you for this information!
Editor’s thoughts: South Africa is well behind the curve where Internet penetration is concerned. But as connectivity speeds improve and costs come down more and more people will be able to complete their purchases online. This trend will create numerous opportunities for sophisticated criminals to exploit. Have you been the victim of an Internet or credit card payment fraud? Add your comments below, or send them to gareth@fanews.co.za
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