These are the most common banking scams in South Africa

The South African Banking Risk Information Centre (Sabric) has released its annual crime report for 2019, showing that the weak state of the country’s economy has provided criminals with the impetus, and opportunity to commit financial crime.

“During 2019, the banking industry experienced increases in burglary and robbery incidents. However, it is evident that putting the correct collaborative structures in place is the key to mitigating these crimes which has seen these incidents decline by 16%.

“Although syndicates continue to orchestrate crimes involving the theft/robbery of physical cash, the evolution of the digital landscape has seen the emergence of cybercrime which is increasing at an alarming rate.”

Sabric said that these crimes will eventually replace many ‘traditional’ bank crimes as they transcend time and physical proximity due to their virtual nature.

The group’s data shows that digital banking incidents increased by 20% in 2019, a number that is set to rise in the future, as criminals continue to use social engineering tactics to extract personal and confidential information from victims, enabling them to transact on their accounts without authority.

As with cybercrime, gross fraud losses on South African issued cards also increased by 20.5%.

“Again, criminals are using social engineering to access bank client card data. It cannot be emphasised enough that bank clients intentionally adopt sound practices and embed them into their consciousness to protect themselves when transacting with a physical bank card or when sharing bank card details,” Sabric said.

“We would like to stress to bank clients that banks will never ask for confidential information such as usernames, passwords or PIN numbers and that they also protect their personal information; identity documents, driver’s licenses, passports, addresses and contact details by sharing it very selectively and on a “need to know” basis only.”

Card fraud

The report shows that total gross fraud losses for South African issued cards increased by 20.5% from 2018 (R890.3 million), to 2019 (R1.07 billion).

Credit card fraud increased by 16.2% when comparing 2019 (R217.2 million) to 2018 (R186.8 million).

Notably, debit card fraud decreased by 15.7% when comparing 2019 (R211.3 million) to 2018 (R250.9 million).

The data shows that in 2019, two thirds (66.6%) of fraud on South African issued credit cards took place outside the country’s borders, while half (50.6%) of South African issued debit card fraud took place in the country.

In 2019 Card Not Present (CNP) fraud amounted to 62% of gross fraud losses on South African issued credit cards, followed by False Applications (27.1%) and Counterfeit (5.7%) fraud.

CNP fraud is a fraudulent transaction where neither the card nor the cardholder is present whilst conducting the transactions.

In 2019 CNP fraud with a debit card amounted to 46.9%, followed by Lost and/or Stolen (38.7%) and Counterfeit (12.0%).

When looking at where this lost/stolen card fraud took place, Sabric said that the most common hotspots include:

• Tollgates;
• ATMs;
• Drinking places;
• Liquor stores;
• Supermarkets.

When looking at where Card Not Present fraud took place, Sabric said that the most common hotspots include:

• Hotels;
• Business services;
• Taxi/cabs;
• Computer software stores;
• Dating & escort Service;
• Travel agencies;
• Utilities (e.g. electricity);
• Airlines.

ATM attacks and robberies

ATM attacks increased by 8% during 2019, the watchdog said.

Most (60%) of these attacks were unsuccessful due to dye stain technology as well as prompt responses from ATM monitoring teams. Despite the low success rate, the losses associated with these incidents increased by 89%, Sabric said.

“The increase can be attributed to a few incidents having higher than average cash losses as well as an increase in incidents where the perpetrators removed the cash from the scene despite the deployment of dye stain.”

Burglary incidents increased by 27% and the associated cash losses by 60% during 2019.

Sabric said that perpetrators targeted assets such as laptops, computers, face-value documents and bank cards.

“This modus operandi is difficult to prevent as it involves quick access to a non-secure area of the branch via a door or window, the snatching of one or two computers or components and then fleeing the scene before the arrival of the responding officers,” it said.

During 2019, bank robbery indents increased by 86% (195).

“In many incidents, the branch was robbed soon after cash deliveries for social grant payments.  The perpetrators also targeted valuables such as laptops, bank cards and face value documents,” Sabric said.

Digital banking

Phishing, Vishing, SMishing and Email Hacking or Business Email Compromise are the most prominent fraud types affecting the digital banking space.

However, the banking industry has reported some isolated incidents where malware was used as a method of compromising a client’s digital banking credentials, Sabric said.

The most prominent modus operandi in Banking App Fraud is Vishing, Sabric said.

Vishing is where a fraudster phones their victim posing as a bank official or service provider and uses social engineering skills to manipulate them into disclosing confidential information. This information is then used to defraud the victim.

“It is important to note that there have been no reports where banking app software was compromised to commit fraud.

“The increase in Banking App Fraud can once again be attributed to the increased usage of this platform by bank clients,” Sabric said.

Phishing remains the most effective way of obtaining banking login credentials, said Sabric.

Phishing emails request that a user clicks on a link which then directs them to a “spoofed” website designed to mislead them into thinking that it is their legitimate bank website, to obtain, verify or update contact details or other sensitive financial information.

Some of the Online Banking fraud modi operandi may also necessitate a SIM swap by the criminal to intercept transaction verification tokens (OTPs and RVNs).

To do this, the criminal will need to do a SIM swap via the bank clients’ mobile service provider. In 6.7% (202) of the online banking fraud incidents reported to Sabric in 2019, SIM swaps were part of the MO as compared to the 5.9% (232) reported in 2018.