Fraud continues to pose the risk of serious financial losses for banking customers. And all indicators are pointing towards the fact that there are new scams and an increasing number of the victims, warns Reana Steyn, the ombudsman for banking services (OBS).
The basic modus operandi of these scams is not new. However, over the years, there is a constant change in the execution techniques that fraudsters have applied. “The success of these scams, and their evolution, is heavily guided by how the consumer will react in each situation,” advises Steyn.
She highlights a matters investigated by her office where a private banking customer fell victim to the a scam to disclose their confidential banking information.
Phishing MO scam
An individual advised that he received emails supposedly from the South African Post Office (Post Office). The emails informed him that he had unclaimed packages waiting for him at the Post Office Head Office.
He advised the representative in the email that he in fact had a package at the Post Office which he was aware of and had not collected yet. He then received an SMS from the Post Office advising him to pay a fee of R42.50 for the package to be released and sent to his nearest Post Office.
The victim followed the instructions on the link he received, and the link opened to a payment option on an official Post Office Payment page. He then inserted his card details and received an “Approve It” message on his cell phone. He accordingly approved the transaction. Immediately thereafter, he received another “Approve It” message from his bank and he noticed the word Singapore and realised that he was being defrauded.
He immediately reported the fraud to his bank and instructed the bank not to release the pending transaction of R16 061.80. However, since the transaction was authorised with the use of the card details and the “Approve It” message, the bank had already released the transaction and refused any liability for the loss that was suffered.
The victim then reported the incident to the OBS and asked for assistance with his complaint against the bank.
The OBS determined that the victim had in fact made the payment himself and approved the transaction through his banking app. The OBS further found that although he advised that he thought he was making a payment for R42.50, however, the message he received from the bank for the authentication of the payment read: “You are about to make an online purchase of CHF 1,000.00 at BIGO Live”.
Since it was clear from the message that the payment was not to the Post Office and that the purchase amount was not R42.50, the OBS found against the victim and concluded that he was unfortunately a victim of a phishing scam where he willingly compromised his confidential banking details.
Fraud claims/losses for OBS complaints exceed R295m in 2021
Steyn warns that banking fraud has become a very lucrative business for online scammers. The banking fraud matters investigated by her office in 2021 alone (the amounts claimed as losses by the victims of the various types of banking scams) exceeded R295-million.
“This is an extremely worrying trend, especially when considering that these funds are mostly lost by individuals and small businesses who, in the majority of cases, are not in a financial position to suffer any kind of financial setback. In addition to the negative effects of Covid-19 on finances, most of these victims will sadly never be able to recover from these financial losses,” says Steyn.
The ombudsman confirms that, in most of these matters, the amounts that are claimed are not recovered as they had already been withdrawn by the fraudsters. In fact, Steyn reiterates that the losses are largely due to the victims falling hook line and sinker to typical and well-publicised scams.
The latest wave of scams to look out for in 2022
According to the OBS’ 2021 records, the ombudsman received and investigated more than 2 880 banking fraud related cases. This was a significant increase of 7,5% from the fraud cases that were investigated in 2020. Most of these matters were due to bank customers falling victim to internet banking fraud, credit card fraud, current account fraud, and ATM card swap scams.
Steyn advises that these scams are avoidable and called on bank customers to be extra vigilant in 2022 to ensure that they (individuals and businesses) do not suffer significant financial losses over a scam that could have been avoided had someone taken the time to consider the possibility that they are being defrauded.
She cautions people to never provide confidential banking details to a stranger over the phone or enter these details on a link received via email or SMS. Finally, never accept assistance from a stranger at an ATM.
Steyn emphasises that no legitimate caller or email from the bank will ever ask a bank customer to provide their card number, passwords, and especially an OTP over the call or a link.
She further advises consumers to refrain from using any links that are received to make payments. Consumers should be extra vigilant when it comes to a link where you are instructed to put in your banking account details that can be used to access the funds from your account.
The OBS has called on all banking customers, banking institutions and other stakeholders to partner with each other in 2022 to educate the public and raise awareness about the various scams that target banking customers (consumers and small businesses).
Steyn advises that the power to prevent these scams lies mostly with consumers as they are the ones being targeted. As such, the scams and the techniques that are used are created to take advantage of the vulnerabilities that the fraudsters have identified.
While there has been some consumer awareness and education regarding the scams that are currently being used and how they committed, the number of fraud victims has not decreased, indicating that more vigorous action must be taken to assist, warn and educate South African consumers.