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SIM-swap victims mull legal action against banks

Apr 24 2017 13:24
Adiel Ismail

Cape Town - A man who lost R1.8m from his bank account is part of a growing group of outraged clients gearing up for a legal fight with banks.

The banks implicated by more than 20 clients are ABSA, Standard Bank, FNB and Capitec, while the mobile network providers are Vodacom and MTN.

"We hope to launch in the next few weeks but as more information comes out and victims come forward, we are considering all avenues," attorney Johan Victor told Fin24. "We will in due course also take action against the cellphone companies."  

In the dark

Spokespeople for the four banks told Fin24 they were not aware of the pending legal case and were therefore unable to comment on the matter. The cellphone companies told Fin24 they were not approached about the planned case.

Victor explained that the potential case, at present, is a combined application on behalf of numerous clients who have been defrauded through alleged SIM-swaps and phishing attacks. Victor said the losses of his clients run into millions, with the highest at present being R1.8m and the lowest R43 000.

The list of demands includes the IP addresses where fraudulent transactions were carried out, full details of all bank personnel who had access to the accounts of clients and details of the accounts to which all monies were transferred to.

The Cape Town-based corporate law activist said this information is similar to that which was outlined in a court order which was granted against Standard Bank, in a matter also brought by his firm last year. In that case the bank settled with the client and therefore didn't transfer any details.

A clear pattern

Commenting about his clients' fraud experiences, Victor said all cases follow the same pattern.

"The clients have all fallen victim to SIM-swap or alleged phishing fraud. However, in none of the cases could it be found, after inspection and analysis of clients' hard drives and computers, that they interacted with any of the phishing emails."  

He said it would appear that syndicates with members inside banks and cellphone companies work together and that the fraud is planned well ahead of time.

"They gather sufficient evidence to know the structure of clients' bank accounts, linked accounts and possibility to transfer funds between accounts, such as home loans, money market or term deposit accounts," claimed Victor.

Victor alleged that there must be numerous staff members involved "as they know exactly what funds are available, which accounts are linked, where money can be transferred to and where it can be paid out, what limits are set on accounts and what internal procedures and amounts will trigger red flags".

He said in many instances, he discovered, the fraud was perpetrated mostly overnight while people were in transit overseas and would thus not be able to access their cellphones for many hours. Victor said these unsuspecting victims were therefore not aware of when a SIM-swap was activated and once they realised what had happened, their accounts were already cleared out.

"This is a further indication of insider work as a lot of the victims made arrangements for transfer of monies for the purchase of currency or available funds in credit cards for use overseas."

Victor said his clients also intend to take legal action against another bank it appears most of the money is transferred to before the accounts get cleared out and closed.

"It would appear that bank has a loophole for people to open accounts which is mainly used for quick and easy transfer of funds." The bank in question is believed to be Capitec.

Forensic team on standby

"It is important to note that fraudsters can use any bank to transfer stolen money to, and this is not unique to Capitec Bank in any way," said Capitec's executive of marketing and communications, Francois Viviers.

He said Capitec has forensic investigators on standby 24 hours a day, seven days a week. "When another bank contacts us with confirmed fraud, our investigators will immediately place a hold on the receiving account and, if the money has not been withdrawn, they will recover it as well."

Standard Bank spokesperson Ross Linstrom said the bank does not have the details of “this group of clients” referred to so is unable to respond, "save to state that each claim received by the bank is assessed on its own merits and an appropriate response is sent to each claimant".

"We continually strive to provide the most advanced online security for our customers and to create awareness around phishing, to help keep our customers informed about the dangers of sharing their credentials or clicking on links.

In the event that legal process is served on the bank, the same review process will be followed and appropriate steps will be taken, Linstrom said.

“MTN SA can confirm that it has not received any form of communication from Johan Victor, a corporate law activist and trial attorney,” Fusi Mokoena, general manager for legal, told Fin24.

Meanwhile, the recently released Banking Services Ombudsman's report revealed an increase in internet banking complaints for 2016. The number climbed to 20% from 16% the previous year, with cellphone banking one of the main drivers.

“This suggests increased cellphone banking activity, but also a need for greater security,” the report said. A total of 940 internet banking cases were closed in 2016.

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