There has been a sharp increase in credit card fraud during the first quarter of 2019, according to a review by the Ombudsman for Banking Services.

Credit card fraud is theft involving a payment card – either debit or credit – as a fraudulent source of funds in a transaction. The fraudster buys goods or has access to funds using the details of a legitimate credit card holder.

“Credit card fraud related complaints increased from 12,2% at the beginning of January 2019 to an alarming 19,47% as at end March 2019,” says Reana Steyn, CEO and Ombudsman for Banking Services. “It is of great concern that the elderly are more vulnerable to this kind of banking fraud.”

Statistics gathered in March indicate that consumers aged between 61-70 make up 21% of the credit card fraud complaints. Those aged between 71-80 accounted for 26%, of incidents, while pensioners older than 81 accounted for 11% of the total.

“The types of fraud identified range from vishing, phishing, fraudulent on-line purchasing, and bank reward programmes used to purchase merchandise,” Steyn says.

Scammers obtained credit card information fraudulently and utilised it without consumers realising what was happening or without their consent.

The OBS offers a couple of case studies to illustrate the type of complaints it deals with regularly:

Case one

Joe Bloggs received a call from a fraudster pretending to be from the bank. The fraudster advised Joe that they had detected fraudulent online transactions in his name and asked him if knew about them. Joe had no knowledge of them and made it clear that he was concerned, believing he was talking to a legitimate bank clerk.

The fraudster advised that they would reverse the transactions, when Joe provided the SMS reference numbers to reverse the “fraudulent transactions”. Joe repeated the SMS reference numbers to the caller – thus enabling the fraudster to transact on his (Joe’s) account – the very thing he thought he was preventing.

Analysis: This is the modus operandi of a fraudster to lure a bank customer into believing that they are attempting to reverse transactions which have not yet taken place. They advise the customer that they will send reference numbers) to their phones which must be read back for the transactions to be reversed. This is the one time password (OTP) which authorises the transaction.

Case two

A fraudster made contact with Linda Dube supplying her with enough personal information (including account details) to convince her he was from her bank.

The fraudster advised Linda that the bank would like to convert her rewards points into cash. They requested a previously-received OTP, to complete the transaction. Linda complied.

Upon receiving further similar calls, Linda realised that something was amiss and reported the matter to the bank the same day. However, by this stage she had already been defrauded out of R11 200.00.

Analysis: The modus operandi of fraudsters in this instance is commonly known as “vishing”. A customer is led to believe that they are being contacted by a legitimate bank employee regarding existing services. This is how the fraudster gains the client’s trust.

“Credit card fraud is a growing concern as banking systems increase in speed and efficiency,” says Steyn. “At the same time, fraudsters apply more sophisticated tactics to defraud and rob customers of their hard-earned money and savings. All bank customers, and particularly the elderly, need to be knowledgeable and vigilant about their preferred banking channels.”