These 3 South Africans were hit by banking fraud – here’s what happened

The Ombudsman for Banking Service (OBS) has published a new report on fraud in South Africa showing that it received a total of 3,785 formal cases for the year to date, largely relating to internet banking, credit cards, ATM disputes, and personal loans.

“ATM and internet banking related complaints are about fraud, mainly phishing and card swapping,” said ombudsman, Reana Steyn. “Complaints related to personal loans are about the balances on the accounts.”

Below Steyn outlined three recent fraud cases she dealt with, and her findings in each instance.

ATM card swapping

In this case, the customer went to the ATM to withdraw her employees’ wages.

She was interrupted by unidentified suspects before she reached the ATM but she managed to chase them away. Upon inserting the card into the ATM machine, and proceeding with the transaction, the card was retained.

A few moments later cash was withdrawn from the account. She tried to contact the bank to block the card but it was unfortunately too late.

The customer was under the impression that the card was retained in the ATM and had no idea that the point of compromise was when she experienced the physical interference by the unidentified suspects.

Due to the fact that employee had unfortunately not been able to report the retained card immediately, and before the funds were withdrawn by the fraudsters, the bank was unable to block the card and mitigate the loss.

The bank can unfortunately not be held liable for the loss as the fraudulent transactions were performed with the original card and secret PIN only known to the customer.

“Based on experience gained from investigations undertaken by this office in similar complaints, it was noted that criminals have devised ingenious and sophisticated means of distracting their victims and obtaining the card and PIN without the victim being aware of what is going on,” said Steyn.

“While we do not want to speculate on what happened at the ATM on the day in question, the complainant, unfortunately, compromised her PIN number and therefore the claim was unfortunately repudiated.”

Steyn said that customer should ensure that they are not distracted in and around the ATM area, or before and after you make use of an ATM.

Outstanding balance dispute on a personal loan

In this case, the customer obtained a personal loan from the bank and in terms of the agreement, her last payment was due to be made on 25 December 2018.

Unfortunately, she experienced financial difficulty and in April 2015 she tried to make arrangements with the bank to pay a reduced instalment for a period of 6 months.

It subsequently transpired that the bank had extended the repayment term of her agreement for a period of 5 years. The customer disputed having requested, signed or agreed to a restructuring of her account.

The bank’s view was that she agreed to the rescheduling terms and conditions, as well as the amended loan repayment term and that it was non-reversible.

The OBS investigated the matter and noted that section 116 of the National Credit Act provides that a credit agreement may only be amended if the amendment is reduced to writing and signed by the customer in confirmation of her agreement with the amendment.

In this instance, the bank was unable to furnish this office with any proof that the complainant requested or agreed to the restructuring of the loan account,” said Steyn.

“Accordingly, we recommended that the bank adjust the loan account in order to place her in the same position she would have been in had the restructure not occurred.

“Te bank agreed and an amount of R64,032.15, in respect of additional interest charged as a result of the restructure, was written-off from the outstanding balance.

Steyn said that the customer remained liable to settle the adjusted outstanding balance, which she was happy to do.

“It is important for bank customers to keep a record of any discussions had with the bank regarding changes made to their account,” said Steyn.

“Bank customers must always request that such changes must be reduced to writing to avoid misunderstandings.”

Internet banking phishing fraud

In this case, the customer acknowledged having disclosed her internet banking details on a phishing site.

As a result, a total of R42,200 was stolen from her account. She believed that the bank should be held liable as she reported the fraud, however, she was of the view that fraudulent transactions continued to ensue thereafter.

“From our investigation, it was found that once the fraud was reported, no further transactions occurred on the complainant’s account and her internet banking profile was timeously cancelled,” Steyn said.

“Unfortunately, by the time the fraud was reported the funds had already been utilised and therefore the bank was unable to mitigate her loss.

“In this instance, the complainant admitted to compromising her internet banking details, that allowed access to her account and ultimately caused the loss suffered.

“There was no evidence to suggest negligence on the part of the bank and that they could have prevented the losses.”

Steyn said it was important that you do not enter your personal banking information on emails or links, requesting them, even when they seem legitimate.

She added that the OBS offers a free alternative dispute resolution service to ensure all bank customers who have complaints that are not satisfactorily resolved at the bank, can exercise their rights and have access to redress. T


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These 3 South Africans were hit by banking fraud – here’s what happened