/ 24 November 2008

Increase in credit-card fraud ‘frightening’

Credit-card fraud cost SA R420-million in the past year and has increased by 146%, the South African Banking Risk Information Centre says.

Credit-card fraud cost South Africa R420-million in the past year and has increased by 146%, the South African Banking Risk Information Centre (Sabric) said on Monday.

”It is a frightening picture, it really is,” said Sabric chief executive Kalyani Pillay.

”Fraud on SA-issued credit cards has increased by 146% between 2005/06 and 2007/08. This increase should be understood in the context of a huge roll-out of cards by South African banks into the market.”

It was estimated in 2006 that there were more than 25,5-million debit cards and 7,2-million credit cards in circulation in South Africa.

The amount of money spent using credit cards at point-of-sale devices increased by 101 % between 2004 and 2007. The amount of money spent using debit cards soared by 547% in the same period.

Most fraud occurred in Gauteng, with criminals using lost and stolen cards.

However, fraud with counterfeit cards caused the most losses in money terms.

”This card fraud type is the single biggest contributor to overall card fraud losses in 2007/08,” said Pillay, adding that it amounted to R118,3-million in the past year, up from R57,2-million in 2006/07.

Vigorous prevention programmes from banks saw a 67% drop in the number of false credit-card applications.

Fraud valued at R420-million was committed on South African-issued credit cards, mainly in South Africa, between 2006/07 and 2007/08, said Pillay.

”South Africa mirrors the credit-card fraud trends in the United Kingdom … Counterfeit card fraud remains the biggest driver of total card fraud losses both in the [United Kingdom] and SA…”

However, the banking industry prevented fraud valued at R573-million in 2007/08.

Also, the retrieval of hand-held skimming devices — electronic devices used to steal card data from magnetic strips — increased by an average of 45% year-on-year since 2005.

”A total of 254 hand-held skimming devices have been retrieved since 2005.”

Pillay said these devices were small and easy for criminals to hide.

Consumers must never lose sight of their credit cards, she emphasised.

She showed a clip of a woman whose card was taken by a man just after she withdrew money from an ATM.

The man called her back to show her a slip — which he had put at the ATM — which said something had gone wrong with the transaction and that she should put her card into the ATM again.

The man pretended to help her by taking her card and putting it back into the ATM. But in actual fact, in a swift movement, had swapped her card with a fake card and placed the fake card in the ATM.

As the woman believed she was about to do a transaction with ”her” card safely in the ATM, the man handed her real card to his partner in crime who quickly swiped it through a skimming device.

The moment the fake card reappeared in the ATM slot to be taken again, the second man pretended to help her and take ”her” card out and hand it to her.

Pillay said criminals sometimes even wore T-shirts bearing the bank’s logo.

Also, if consumers wanted to cancel their cards by dialling the number on the ATM, they should not let anyone dial the number for them.

It often happens that a criminal, wearing a bank T-shirt, would ”helpfully” dial the number to a fake call centre.

”The success of most bank-card scams that we see doing the rounds in the country really depends on the response of bank customers to the advances of the fraudsters,” said Pillay.

The roll-out of credit cards with PIN technology is expected to ”significantly contribute” to a reduction in credit card fraud, added Pillay. — Sapa