Crooks cash in on easy bank credit

Faceless, borderless criminals are raking in hundreds of millions in South Africa. And they are getting particularly good at a specific method.

Card fraud increased by nearly a fifth to R577-million last year, according to statistics compiled by the South African Banking Risk Information Centre.

Though card skimming and online phishing are still around, the biggest contributor to the increase was fake applications for credit cards, says Sabric CEO Kalyani Pillay.

False application fraud ballooned to R78.3-million by the end of September, from R6.2-million last year.

The phantom fraudsters take cards to ATMs, department stores, grocery chains and clothing stores to tap them dry, says Pillay.

"They get the facility and then max out the credit cards."

Only when they never pay and banks issue summonses to litigate does it become clear that those who do the swiping do not exist, Pillay says.

They apply online with false information.

According to Hawks chief Lieutenant-General Anwa Dramat, a quick response is needed when dealing with criminals of this kind.

In some instances cards are swiped in foreign countries within eight hours of either being stolen or fraudulently obtained.

"We are constantly looking at what the vulnerabilities are," Dramat says.

"The perpetrators are faceless and borderless; we need to foster cooperation internationally."

The bank suffers the loss, not the client, says Pillay.

But financial institutions have been tightening their systems to stamp out this form of fraud, which now accounts for a sixth of all South African credit card graft.

Debit card fraud was up 5% to R123.5-million.

The increase was much tamer than for other forms of card fraud.

This was largely thanks to EMV chip technology, says Susan Potgieter, Sabric's general manager for commercial crimes. The chip and pin required makes it much tougher to use cloned cards. Perpetrators cross the closest borders to swipe in Lesotho, Zimbabwe or Botswana where the magnetic strip alone is often still sufficient.

"It would be ideal to get rid of the magnetic strip," says Pillay, but this would limit many bank clients' payment options internationally.

Credit card fraud in general increased 23% to nearly R454-million.

"It is a very significant increase," Pillay says, urging the public to be careful when entering their PINs and not to let their cards leave their sight.

Credit card fraud increased in eight of the nine provinces, with only North West showing a slight dip.

About 55% of all credit card fraud happens in the economic powerhouse of Gauteng, 22% in the Western Cape and 9% in KwaZulu-Natal.

"These provinces also recorded the highest number of skimming devices retrieved," says Pillay.

From 2005 to September 2014 a total of 1377 handheld skimming devices were recovered by either the police or bank investigators, with 74 of them seized this year.

"Card skimming involves the illegal copying of encoded information from the magnetic strip of a legitimate card by means of a card reader, and this could occur either at ATMs or points of sale," said Sabric in a statement.