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Cellphone banking fraud on the rise

Apr 12 2013 17:30 Fin24

(File) (Shutterstock)

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Cape Town - Banks must tighten safety measures to protect consumers against the rising tide of internet and cellphone banking fraud in South Africa, warned the banking ombudsman on Friday.

Cellphone banking fraud cases rose by 8% last year and internet cases increased by 3%, said Ombudsman for Banking Services (OBS) chairperson John Myburgh.

Myburgh also noted in the OBS annual report for 2012 that the growing mobile customer base spurred banks to launch ever-more innovative mobile payment options.

He therefore urged banks not to compromise on security.

"There has never been a greater need for security and control in the banking environment," said Myburgh.

“This is not only because of the rise in internet banking fraud, but because the banks have a duty to commit to the Code of Banking Practice, which calls for safe, secure and reliable banking and payment systems.”

Myburgh said security means more than identifying the risks and sanctioning the fraudsters.

"Solutions must be tailored to specific sectors and operations, and they must keep pace with the growing sophistication of attacks on banking systems.”

Protection of Personal Information act

Banks will have to deal sensitively and transparently with the disclosure of personal information once the Protection of Personal Information act is legislated, cautioned Myburgh.

The Ombudsman Clive Pillay noted that 2012 saw a marked rise in the number of cases reported to the OBS.

It opened files on 4 450 complaints, an increase of more than 800 compared to 2011. Complaints from top banks were:

  • 1 335 from Absa Group Bank [JSE:ASA]
  • 1 260 from First National Bank
  • 845 from Standard Bank Group [JSE:SBK]
  • 648 from Nedbank Group [JSE:NED] and
  • 252 from Capitec Bank Holdings [JSE:CPI]
ATM-related complaints were the most predominant, with more than 2 000 being investigated. Internet banking complaints was the second most, with a total of 1 160 files opened.

The number of overall cases found in favour of complainants fell to 42% as opposed to 47% in the previous year.

This decline was attributed to an increase in the number of cases judged to result from debt-stressed consumers who requested relief from their banks in the form of extended repayment terms or reduced interest rates, rather than instances of bank maladministration.

Absa Bank on Wednesday launched a new app for mobile and tablet users to perform their banking transactions.

Head of retail banking at Absa, Arrie Rautenbach said with this launch‚ Absa customers could enjoy the speed and convenience of simple‚ intuitive payments and effortless navigation with fewer clicks to perform their banking transactions.

On Tuesday, FNB announced a cellphone-based instant money transfer service between South Africa and Zimbabwe on Tuesday.

"We have done extensive research into the cross-border remittance market and devised a service that is readily accessible to the people who need it most," Yolande van Wyk, head of digital and alternative banking for FNB Africa, said in a statement.

In 2011, FNB became the first bank in SA to launch a mobile banking app for major platforms.

 - Fin24

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fnb  |  absa  |  cellphone banking
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