credit card chip XXX Picture: THINKSTOCK
credit card chip XXX Picture: THINKSTOCK

The South African Banking Risk Information Centre has released the latest research on trends in bank card fraud on South Africa-issued cards, showing credit and debit card fraud losses amounted to about R779-million in 2017.

The fraud statistics show the gross fraud losses incurred by the banks, consumers and merchants before the banks carry out an investigation to determine liability for the losses relating to card fraud. The report covers various categories of card fraud.

Sabric CEO Kalyani Pillay says bank clients report incidences of fraud to their banks, which in turn investigate. Depending on the bank's findings, a decision is made on who carries the loss, which could be the bank, the merchant or you, the consumer. Sabric does not collect data on losses other than those incurred by the banks, she says.

Last year police recovered 40 point-of-sale skimming devices, 36 ATM skimming devices and 16 handheld skimming devices.

You can be held liable for fraud on your account if the bank can prove you have compromised the security of your card or PIN.

The Sabric report inexplicably does not cover the incidence of fraudsters obtaining access to a consumer's online banking profile, which typically involves losses for the banks and consumers.

The three most costly types of credit card fraud - those where the gross fraud losses to the bank were the highest - reported on by Sabric last year were: card-not-present fraud, counterfeit card fraud and lost and/or stolen card fraud.

Card-not-present fraud

This is a fraudulent transaction where neither the card nor the cardholder is present while transactions are being made. Sabric says these occur when retailers are unable to check the card or the identity of the cardholder when goods are ordered telephonically and purchases are made online or via mail order.

Card-not-present fraud accounted for almost 73% of gross fraud losses on credit cards, or R318-million, according to Sabric. This type of fraud has increased 7.5% since 2016 and is at an all-time high, having increased steadily since 2011, Sabric reports.

Card-not-present fraud is generally carried out using fraudulently obtained card data and personal information sourced through discarded receipts, prior card-not-present purchases and phishing.

High losses are incurred in card-not-present fraud, Sabric says, because in this type of fraud big-ticket items such as airline tickets, hotel accommodation and purchases at "specialty retail stores" are made.

Card-not-present fraud is also perpetrated using debit cards. Sabric reports that card-not-present fraud on debit cards increased 60% from R61-million in 2016 to R98-million in 2017.

Counterfeit card fraud

Counterfeit credit card fraud - or transactions on counterfeit credit cards - decreased from R108.9-million in 2016 to R83.6-million in 2017, yet was the second-biggest source of fraud losses on South Africa-issued credit cards in 2017, Sabric reports.

Counterfeit credit card fraud is perpetrated with a card that has been illegally manufactured using information stolen from the magnetic strip of a genuine card. "In some instances, lost and/or stolen cards and/or old cards are re-encoded with information stolen from a genuine card for purposes of committing counterfeit card fraud. The information needed for a counterfeit card is usually stolen from card skimming."

Point-of-sale devices, devices mounted in ATMs and handheld devices are all still prevalent modus operandi in the skimming of cards, Sabric says.

Last year police or bank investigators recovered 40 point-of-sale skimming devices, 36 ATM-mounted skimming devices and 16 handheld skimming devices. Most of the devices were found in Gauteng.

Lost or stolen card fraud

Lost and/or stolen credit card fraud is the third-biggest contributor to fraud losses on South Africa-issued credit cards.

Gross losses stemming from lost and/or stolen credit cards increased by 44.5% from R17.8-million in 2016 to R25.7-million in 2017 and accounted for almost 6% of the total gross fraud losses on credit cards last year.

Sabric reports that last year fraud on lost and/or stolen debit cards accounted for 51.6% of the total fraud losses on debit cards.

"In many cases, lost and/or stolen cards were obtained by interfering with customers while transacting at an ATM. Criminals distracted victims by offering them assistance, during which the card and PIN were obtained."

The card then gets used at ATMs until the daily withdrawal limit is reached, after which high-value transactions are made at merchants.

Protecting your personal information is vital

With enough of your personal information, fraudsters are also able to "take over" your bank account and obtain credit in your name.

The South African Banking Risk Information Centre says "account takeover card fraud" happens when an account is taken over by someone posing as you. The fraudster then uses your account for their benefit. The fraudster can do this by applying for a replacement card to use fraudulently. Fraudsters also commit "false application fraud" - obtaining credit in your name.

Senzo Nsibande, head of card fraud at FNB, offers the following tips to guard against falling victim to card-not-present fraud, which occurs when fraudsters use your credit or debit card information to shop in your name:

When shopping online, make sure you're on a secure site - look for https in the URL;

Don't go to online shopping sites via links in e-mails or via other websites - rather type the URL into your web browser yourself;

During an online shopping session, don't share with anyone the one-time password sent from your bank to you; and

Subscribe to receive SMS notifications from your bank so that you're notified of every transaction on your credit or debit card account.