Digital banking fraud on rise

Digital banking fraud increased by 20% year-on-year in 2019, but the counterfeiting of credit and debit cards showed significant declines.  

Violent bank-related robbery of money or bank cards from clients while they were on their way to or from a bank branch or ATM decreased by 2% compared to 2018.

The South African Banking Risk Information Centre (Sabric), which compiles statistics on behalf of the banking industry, said Limpopo, Mpumalanga and the Western Cape showing the biggest decreases in these types of crimes, but that they had increased 10%  year-on-year in the Eastern Cape.

According to the centre’s latest report,  the overall gross losses on card transactions due to criminal activity in SA was R428.6m in 2019, a 2% decrease from the previous year.

However, the banking centre reported an increase in business burglaries of 27% year-on-year, while business robberies shot up by a staggering 86% in 2019.

And though the Eastern Cape showed a 7% decrease in bank robberies, from 45 to 42,  these crimes in Limpopo rose by 600%, from 2 incidents in 2018  to 14 in 2019.

According to the report, digital banking fraud increased by 20%. However, fraud losses on banking apps increased by just 1%.

Despite a huge drive by banks to increase the number of transactions processed on apps, the total gross loss for 2019 was R106.3m.

There were no reports from any of the banks of a banking app being technically compromised to commit fraud.

The centre’s CEO, Nischal Mewalall, said though banks had “sound security measures in place” criminals knew this.

“[Criminals] therefore resort to manipulative social engineering tactics to get bank customers to inadvertently share their personal and confidential information, allowing them access to transact on customer accounts without authority,” Mewalall said.

Digital credit card and debit card fraud increased by 20.5% in 2019, with the leading contributor “card not present” fraud (when a card number is used fraudulently by someone to make a payment without the physical card), he said.

ATM attacks decreased by 9% overall in the period under review, with the Eastern Cape showing a 14% decrease.

And though the Eastern Cape showed a 4% decrease in cash-in-transit robberies, these crimes were up 13% and 7% respectively in KwaZulu-Natal and the Free State.

The counterfeiting of SA-issued credit cards decreased by 44.8% in 2019 year-on-year — and declined 34.8% for debit cards.

Mewalall said collaboration between the centre’s  members and other stakeholders was critical in combating organised financial crime.

“Sabric is well positioned to do just that, by leveraging the collective efforts of its members and stakeholders. These results show what’s possible,”  he said.

Mewalall said the Covid-19 pandemic was having a marked effect  on white collar crime globally, resulting in an increase in new scams involving personal protective equipment, fake vaccines and phishing scams.