Fraudsters exploiting bank’s technological advancements

A customer uses their card to make a payment.

By Khulile Thwala

Technological advances in the banking sector have eased how we can use services but they have also come with new risks. 

Unsuspecting emaSwati and local banks have been victims of banking fraud, which has become a prevalent challenge in the sector. The losses accumulated by banks due to fraud have varied over the years, with amounts estimates ranging from approximately E21 million to E30 million.

According to a research paper titled ‘Cybercrimes in the Eswatini banking sector – Implementing Routine Activity Theory Analysis’, compiled by Botho University and the North West University in South Africa, in 2015, Eswatini banks such as Wesbank lost up to E3.4 million. In 2016, the Central Bank of Eswatini recorded approximately E20 million in losses due to fraud. 

The paper further reports that First National Bank (FNB) recorded close to E4.2 million in losses. The Deputy National Commissioner of Police Mumcy Dlamini, in 2018, also reported an excessive loss of E30 million due to fraud, inclusive of banking fraud. The emergence of the Covid-19 pandemic revolutionalised the banking sector through innovation, in a bid to avert the risk of spreading the disease. 

One of the innovations which were magnified during the pandemic was contactless payment methods or the ‘tap and go’ payment, which includes tapping ATM cards on a point of sale (POS) terminal to process payments. Locally, banks jumped on the bandwagon, with a majority of them introducing this payment method.

The rapid growth of this form of payment has attracted the attention of fraudsters who are always seeking out new methods to steal money.

According to SQN banking systems, the kind of fraud that takes place in the realm of contactless payments is currently unsophisticated – the accidental loss or deliberate theft of a debit or credit card. Criminals can make several purchases up to the limit before a PIN is needed. 

This ensures that even if the loss or theft of the card has not been immediately realised and reported to the provider, there’s a hard limit on the number of times it can be used. While levels of fraud associated with contactless payments are currently low, history shows that fraudsters will keep evolving their techniques to find new ways to steal people’s money.

Eswatini Bankers Association (EBA) Chairman Zakhele Lukhele says to prevent card fraud, and that includes preventing ‘tap to pay’ fraud, customers should always know where their cards are and keep them in a safe and secure place. 

“They must prevent cards from being taken out of their sight when performing transactions. When a card is lost, or the client is not sure where it is or suspects in any way that it has been compromised, the customer can block the card at the nearest branch of his or her institution or use the banking app to block it instantly,” said Lukhele.

He says customers should also ensure that their phones always receive SMS notifications to keep constant track of their transaction activities so that whenever they notice unusual activity they can block their cards immediately. 

“Customers are encouraged to always ensure that their phones are roaming when outside of Eswatini to continue to get bank notifications. On every tap-and-go purchase, customers must ask for a receipt to see if they were charged the correct amount. For those merchants, who may require a PIN, always cover your hand with the other one when putting in your PIN,” said the former Eswatini Bank managing director.

…… Rigorous anti-fraud awareness campaigning during festive

Banking technology has advanced to the point where we no longer need bank cards to make payments.

The Eswatini Bankers’ Association (EBA) which represents all the banks and the Building Society through their anti-fraud team (Fraud Liaison Committee), has always undertaken a Festive Season Anti-Fraud Awareness drive to educate the public on fraud prevention. 

According to Lukhele, the anti-fraud campaign is intended to create awareness on how to identify and prevent fraud and protect oneself from being a victim. He said the campaign is normally launched towards the festive season in November as fraud tends to increase around this time.

“Due to the ever-increasing risk, the EBA decided to be even more proactive this year and started their campaign in October. The campaign will continue throughout the festive season. Roadshows have been planned to cover all four regions of the country. A roadshow has already taken place at Buhleni, Matata bus rank, and Malkerns, where the team educated the public on measures of preventing fraud. School principals together with their school committees have also been educated on fraudulent activities,” said the EBA chairman.

Through their association with other crime prevention structures, the EBA also participates in International Fraud Awareness Week which is normally held in November. During this week the EBA, through the Fraud Liaison Committee, spreads the gospel on Anti-Fraud measures to sensitise bank customers and the general members of the public to the various scams and schemes prevalent in the horizon used by fraudsters to target customers and members of the public. 

“We partner with several stakeholders such as the Police, the Director of Public Prosecutions (DPP’s) Office, the Central Bank of Eswatini, the Financial Intelligence Unit (FIU), and the Eswatini Communications Commission (ESCCOM) in sensitising members of the public to the fraud scourge.”

Lukhele said fraud victims should report incidents to the police and their respective institutions immediately. He said measures such as blocking cards and calling the bank, should be taken immediately after fraudulent transactions have been noted.

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