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Cardless bank fraud soars as cloning drops

| Crime and security

Online and telephone banking fraud has soared to its highest level in 10 years and cost the industry millions in losses.

This is reflected in South African Banking Risk Information Centre (Sabric) data, released on Wednesday, as authorities are adopting a tougher stance on this type of crime.

The activity is known as card-not-present fraud, when credit or debit card details are used to do transactions online or over the phone.

In the nine months to September, credit card fraud rose 12.6% to R189.2m and debit card fraud surged 15.8% to R118.9m.

Sabric CEO Kalyani Pillay said: "Over the last two to three years, we have seen a shift to card-not-present fraud." In previous years, lost and stolen cards accounted for the bulk of the cases.

The rising use of online shopping and other forms of web transacting have been cited for the steep surge in this type of fraud.

Card-not-present fraud has also contributed to an 8.3% overall increase to R257.1m in debit card fraud, which includes false applications, counterfeit cards, as well as lost and stolen cards.

"It used to be lower," said Ms Pillay. "Banks now allow debit cards to be used for online transactions. (They) offered this solution to make banking more accessible."

Fraudsters tend to buy airline tickets compromised with credit and debit cards. They then sell them to third parties at a discount.

Losses from counterfeit cards, where information is stolen and used to clone cards, have plunged.

Losses from fake credit cards fell 45.6% to R48.5m and those from debit cards dropped 29.5% to R81m.

Banks are now getting rid of cards that do not have a chip and pin feature, which has been credited for the drop in counterfeit cards.

Authorities are also getting tough on counterfeiters.

In May, National Prosecuting Authority (NPA) spokesman Velekhaya Mgobhozi said the Johannesburg Commercial Crime Court handed down a 10-year sentence to Oscar Sephiri and Philani Mbandlwa for cloning credit and debit cards.

Mbandlwa was employed by courier firm UTI and collected and delivered cards to bank clients.

In a separate case, the NPA in the Eastern Cape sentenced Toni Bacar, Zarco Cugurovic and Adrian Wardle, members of a syndicate operating in a number of provinces, to seven years in prison for possession of skimming devices and fraud.

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