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Fraud spikes as crooks try to hit shoppers

Nov 20 2014 14:10

Johannesburg - Credit and debit card fraud has seen a sharp upward spike as fraudsters prowl for holiday shoppers, according to Paul Kent, managing director of SureSwipe.

“The good news is that debit cards are less likely to be scammed than credit cards. You are also less likely to experience fraud at a store than online or at an ATM. There is so much security at tills in stores that it is very hard for a fraudster to get away with it," said Kent.

"We saved merchants and consumers more than R52m this year by picking up fraud attempts quickly. But at this time of the year criminal activity tends to accelerate. Globally, the use of pins has seen a decline in credit and debit card fraud, but criminal syndicates have become better at stealing information from stores through their computer systems and making fake cards.”

Online shopping and ATMs are the places where consumers – anywhere in the world – are most likely to encounter fraud.

Earlier this year the South African Banking Risk Information Centre (Sabric) revealed that the banking industry’s gross fraud losses due to South African-issued credit card fraud grew by 22% – from R300.6m in 2012 to R366.8m in 2013.

And global cyber-security firm, Norton’s 2012 Cybercrime Report, placed South Africa third, behind China and Russia, as the world’s leading cyber-crime hotspots. Counterfeit credit-card fraud losses rose 27% in 2013.

'Sticky ATM' trick

The Better Business Bureau in the United States this month also warned consumers and stores about “sticky ATM’s": in this con, thieves glue down certain ATM buttons like "enter", "cancel" and "clear" to prevent users from completing a transaction after inserting a cash card and keying in a PIN. Frustrated, they leave the machine to report the problem and crooks move in to complete the withdrawal.

Worldwide, according to US government statistics, credit card fraud exceeds R110bn a year. The European Central Bank says credit card fraud in Europe amounted to Euro1.3bn. It said in 2012, 60% of fraud resulted from “card-not-present-payments" - that is payments via the internet, post or telephone - 39% of fraud was with stolen or lost cards, while 17% of fraud was at ATMs.

SureSwipe said the same situation pertains in SA too.

"Cyber-criminals are very sophisticated, but so are our technical teams and those of banks,” said Kent.

Stolen bankcard data is sold to third-party resellers. Once it’s with an underground dealer, card counterfeiters buy the magstripes they need and copy it onto fake cards using their own magstripe encoding machines.

They use the cards to buy goods they can resell.

“Last year only 9,.5% of South African purchases were online, but estimates are that those figures have since doubled and it is here that credit cards are most vulnerable, also in any situation where a consumer verbally gives his or her credit card information over the phone,” said Kent.

Kent's advice for consumers:

- Don’t give credit card details over the phone or email;

- Never give away your PIN or the 3-digit security code at the back;

- Skimming is common - watch your card the minute it leaves your hands;

- Check that the purchase amount on the card machine is the same as what is printed on your slip;

- Only shop on secure websites;

- Get SMS alerts every time your card is used;

- Shred bank statements - criminals search rubbish bins for clues to defraud you;

- Use any anti-virus software your bank recommends;

- Ensure your card password or PIN is not the same as that for other accounts;

- Check your bank statements, immediately query anything you are unhappy about;

- At Stores with the SureSwipe anti-fraud logo, staff have undergone extra anti-fraud training;

Tips for retailers:

- Independent fraud investigators will professionally investigate claims;

- Run criminal checks on your staff members. If your company or store is ever listed for fraud, you will not be able to obtain credit/merchant services for up to five years;

- Use security cameras where transactions take place, for example at pay points and tills.

sa economy  |  consumers  |  fraud  |  scams
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