Banks' financial losses from credit card fraud have increased by 53% this year to R403.15-million, the South African Banking Risk Information Centre said yesterday.

Sabric CEO Kalyani Pillay said the increase in losses had to be understood in the context of banks' aggressive marketing.

"All the banks are signing up more new customers, and providing products such as credit cards to existing customers who previously did not have access to these products. The higher volumes of cards in the market provide more opportunities for credit card fraudsters to carry out their scams," she said.

Gauteng, KwaZulu-Natal and Western Cape account for 92.3% of credit card fraud losses this year.

Losses as a result of fraudulent use of cards increased by 72%.

Counterfeit card fraud increased by 63% (to R176-million from R89-million last year) and accounted for 57.2% of overall banking industry financial losses this year. Fake cards are typically manufactured using information stolen from the magnetic strip of a genuine card.

Pillay said the number of cash withdrawals at ATMs using counterfeit credit cards had increased this year.

"This phenomenon could be linked to the prevalence of card skimming and data compromise in general.

"Although most of these transactions occurred within South Africa, an increase in the use of counterfeit credit cards at ATMs in the neighbouring countries was also visible. Card skimming played a role in the year-on-year rise of counterfeit card fraud, particularly in the Western Cape and Gauteng," she said.

According to Sabric data, the banking industry's financial losses resulting from credit card fraud in the Western Cape increased by 108% this year to R30.2-million. Fraud where a card was not present (fraud via internet, mail or telephone purchases with bank cards) was the most prominent category in this province.

Fraud where the card was not present was now the second-most prevalent card fraud type in South Africa, after counterfeit cards.

In Gauteng, credit card losses increased by 56% to R88.4 million and counterfeit card fraud was the most prominent category, resulting in losses of R40.4-million - a spike of 74%.

Sabric general manager for commercial crime Susan Potgieter said: "Losses due to counterfeit card fraud in Gauteng are the highest nationally, and this is of concern to the banks. In Gauteng alone this year, banking industry investigators and law-enforcement agencies retrieved a total of 86 skimming devices, signalling the scale of card skimming in this province."

In Gauteng, lost and stolen card fraud had declined by 16% (R7.2-million in losses), account take-over fraud declined by 50% and fraud using issued cards that weren't received by the account holder decreased by 64%.

Losses resulting from credit card fraud in KwaZulu-Natal decreased by 15% this year from R19.6-million in 2009/10.