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Card fraud in SA rises by 20.5%

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Credit and debit card fraud has increased by 20.5% due to online transactions between 2018 and 2019.

File Image: IOL

Cape Town – Credit and debit card fraud has increased by 20.5% due to online transactions between 2018 and 2019.

The South African Banking Risk Information Centre (Sabric), on behalf of the banking industry, on Tuesday released its annual crime statistics for 2019.

Chief executive Nischal Mewalall said the increase in card fraud must be viewed against the growth of the credit card payment system which has seen a rise in the number of transactions processed by banks, plus the number of card holders and merchants.

Mewalall said the leading cause of gross card fraud losses is “when your card number is used fraudulently by someone else to make a purchase at a garage while the physical card is in your possession”.

He said 66.6% of all fraud on SA-issued credit cards took place in a foreign country: “South African e-commerce merchants largely comply with 3D Secure whereas merchants abroad don’t use 3D Secure.

“Overall gross losses on card transactions in South Africa amounted to R428.6 million. This was a 2% decrease when compared to the previous year.”

Mewalall said the counterfeiting of cards decreased by 44.8% for credit cards and 34.8% for debit cards.

He said the Covid-19 pandemic has had a marked impact on crime globally, with Sabric already having noticed an increase in scams involving personal protective equipment and fake vaccines.

“Amendments to grant distribution processes, the increased use of deviations in procurement processes and the availability of relief funding to businesses and employers will make South Africa even more vulnerable to corruption, armed robberies, application and procurement fraud in 2020 and beyond,” Mewalall added.

He said in 2019, violent bank-related robbery of cash or a bank card committed against a bank client en route to, or from a bank branch, ATM or cash centre to make a deposit or withdrawal, increased by 2%.

He said Limpopo, Mpumalanga and the Western Cape have shown the most significant decrease in those crimes.

“The North West, Free State, Western Cape and Gauteng accounted for the greatest decreases in incidents.”

He also reported that cash-in-transit robberies decreased by 16%, and said most provinces, with the exception of KwaZulu-Natal and the Free State, experienced decreased incidents.

Andrew van der Hoven, head of digital banking at Standard Bank, said during April it noted an increase in phishing scams in which fraudsters tried to entice customers to reveal personal and sensitive information via fake emails, SMSes or websites.

Van der Hoven said the highest volumes of cyberfraud were perpetrated on the internet banking channel, which is largely accessed via a desktop or laptop: “Desktop-banking remains an easier target for data breaches as the verification process is based on a pin and password combination.”

Stellenbosch University’s Bruce Watson said most cyber-security professionals were working from home due to the pandemic and lockdown, limiting their ability to defend companies against cybercrime.

He said that for most people, working from home also encouraged short-cuts, which increased risks.

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