Ombud found in favour of banks in 80% of internet fraud cases. Picture: 123RF
Ombud found in favour of banks in 80% of internet fraud cases. Picture: 123RF

Almost 50% of all complaints to the Ombudsman for Banking Services (OBS) in 2018 were fraud related, with internet banking fraud being the top category of complaint, followed by ATM fraud and credit card fraud.

This is according to the 2018 annual report released by the OBS, on Wednesday. For a third year running, internet banking fraud has dominated, and in 80% of these cases, the ombud found in favour of the banks.

Complaints relating to online banking fraud, ATM fraud and credit card fraud were the top three types of complaints in the previous year under review, too.

“We have continued to receive a steady, daily stream of complaints from people who have been victims of fraud and it seems the end of this trend is nowhere in sight,” ombud Reana Steyn says in the 2018 annual report.

The report shows that the OBS finalised 1,349 complaints concerning internet banking, 265 (20%) of which went in favour of the consumer. In only 14% of the 1,053 ATM-related complaints finalised in 2018 the OBS found in favour of consumers, and in 26% of cases relating the credit card complaints the OBS found in favour of consumers.

In all of these categories, complaints are increasingly being settled in favour of the banks, or against consumers, as compared with the previous year.

In the previous year, the OBS finalised more internet banking complaints (a total of 1,377) and found in favour of consumers in more instances (23%). Likewise, in 2017 the OBS finalised 1,115 ATM-related complaints and in 18% of cases found in favour of the consumer. In 2017, there were fewer credit card complaints (764), but a higher number of those were found in favour of the consumer (33%).   

In a media release issued by the ombud on Wednesday, Steyn says fraudsters and hackers seem to be working around the clock to create fake copies of bank websites and impersonate bank staff.

They send bank customers e-mails and contact them via telephone. The e-mails and calls are so convincing that many customers get taken in, she says.

“This happens despite all the warnings issued by banks and our office. Thousands of customers are fooled by the scammers and in the process they lose millions of rand. In many cases, victims disclose their personal banking details, passwords and PIN numbers, which are the direct cause of the loss, and in those instances the banks are not in a position to issue a refund,” she says.  

The OBS’s annual report does not report on the losses suffered by consumers in any category of crime.

Treating customers fairly

In terms of the treating customers fairly (TCF) regulatory and supervisory approach, regulated entities providing a financial product or service must be able to demonstrate that they deliver on six outcomes to their customers throughout the “product lifestyle”.

The OBS’s latest annual report shows that in most cases (97.7% of complaints to the ombud), customers were not satisfied that they had been provided with clear information and kept appropriately informed before, during and after the “point of sale”. This was particularly pronounced in complaints relating to internet banking, ATMs and credit cards, as well as those relating to personal loans, mortgage finance and current accounts.

Banks also scored badly when it came to complaints about failing to meet expectations and providing service of an acceptable standard.