The banking industry's gross fraud losses due to South African-issued credit card fraud increased by 23% from R366 million in 2013 to R453.9 million in 2014, largely due to criminals' misuse of online application channels.
That is according to figures released by the South Africa Banking Risk Information Centre (Sabric) this morning. Presenting the statistics, Sabric CEO Kalyani Pillay said it is worrying that credit card fraud is on the increase.
She revealed the biggest contributor to the increase has been false application fraud which saw a significant increase from R6.2 million in 2013 to R78.3 million in 2014. Sabric has found criminals misuse the online application channels provided by banks, by using fake details to open multiple credit card accounts, she said.
According to Sabric, debit card gross fraud losses amounted to R123.5 million in 2014 compared to R117.7 million in 2013, a 5% increase.
Of all fraud perpetrated on cards acquired through false applications, 88% of the transactions occurred in SA, said Pillay.
On a positive note, she said counterfeit credit card fraud losses inside SA decreased by 12% from R55.1 million in 2013 to R48.4 million in 2014. To the contrary though, Pillay revealed card-not-present fraud committed within SA increased 21% from R56.7 million in 2013 to R68.9 million in 2014.
"The majority of the debit card losses are related to counterfeit card fraud and most of the transactions occurred within South Africa. When debit cards are used outside of the borders of South Africa, a high percentage of the cards are used in neighbouring countries such as Lesotho, Nambia, Zimbabwe, Mozambique and Botswana," said Pillay.
Skimmers abound
Credit card fraud is most prevalent in the provinces of Gauteng, the Western Cape and KwaZulu-Natal as they collectively accounted for 88% of all credit card fraud losses in SA. These provinces also recorded the highest number of skimming devices retrieved. From 2005 to September 2014, a total of 1 377 handheld skimming devices were recovered by either SAPS or bank investigators, with 74 of these seized between January and September 2014.
The majority of handheld skimming devices were recovered in Gauteng (38), KwaZulu-Natal (13) and the Western Cape (nine), says Sabric.
Pillay explained skimming involves the illegal copying of encoded information from the magnetic strip of a legitimate card by means of a card reader, and this could occur either at ATMs or points of sale.
"We urge bank customers to adhere to ATM safety tips such as not accepting assistance from anybody at the ATM and not letting their cards out of their sight when transacting," said Pillay.
She also noted the five countries with the highest recorded financial losses due to card-not-present and counterfeit fraud on SA-issued credit cards during 2014 are the US, India, Mexico, Brazil, and Canada.
Also speaking during the event, Hawks head lieutenant general Anwa Dramat said law enforcement agencies in SA are continuing to looking into the vulnerabilities that criminals are exploiting for fraud. He also noted that, for the war against card fraud to be won, SA needs to better cooperate with its international partners.
Dramat said, besides the increases in the value of credit card fraud, there has also been a number of success stories thanks to the partnership between Sabric and the Hawks. As an example, he pointed to the foiling of a R3.5 billion heist from power utility Eskom.
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