Card fraud shocker in South Africa

Nearly a third of South Africans have been a victim of card fraud over the past five years, according to a new global study.

At the end of last year, the SA Banking Risk Information Centre (Sabric) said that the value of debit card fraud losses decreased by 42% between January and September of 2013, compared to the same period in 2012.

It fell from R204 million to R117.7 million over the two years, it said.

A new fraud study of more than 6,100 consumers across 20 countries, including South Africa, revealed that one in four consumers is a victim of card fraud in the last five years, while locally, that number stands at three in ten in 2014, up from a quarter in 2012.

The study, conducted by universal payments company, ACI Worldwide and Aite Group, also highlighted that nearly 25% of consumers changed financial institutions due to dissatisfaction after experiencing fraud.

Card fraud is comprised of unauthorized activity on three types of payment cards—debit, credit and prepaid.

South Africa was seventh on the list, behind the UAE (44%), China (42%), India (41%), the US (41%), Mexico (33%), and Australia (31%).

Card fraud by countryIn 2014, 14% of debit and credit card holders cite having experienced fraud multiple times during the past five years, while 23% changed financial institutions due to dissatisfaction after experiencing fraud.

“Consumers are increasingly concerned about fraud, and are losing confidence on a variety of levels,” said Mike Braatz, senior vice president, Payments Risk Management Solutions, ACI Worldwide.

“They are unsure that their financial institutions can protect them against fraud; they use replacement cards less often due to a loss of confidence in the card or card issuer, after experiencing fraud; and post-fraud, they often change providers or their cards go to back of wallet. This has immediate and long-term implications on customer loyalty, revenue and fee income.”

South Africa

Questioning a sample of 314 people in South Africa, the survey found that 22% of respondents left their smartphone unlocked when not using it.

Up to 16% used online banking or Internet shopping without security software or on a public computer in SA, while 11% made a note of their PIN and carried it with them or kept it with their card.

When question on the following: How happy were you with the treatment from your financial institution when you experienced card fraud?

Three in 10 South African respondents said they were “very happy”, while 18% said they were “very unhappy”.

And asked if as a result of their experience with fraud, whether they had change their financial institution or credit card company? as many as 17% of local respondents said they did.

And when asked the following: Do you have confidence in your financial institution to protect you from card fraud?

62% of local respondents said: ‘Yes, to an extent, they’re doing what they can’, while 24% said ‘Yes, absolute confidence’, while only 3% said ‘No, I have very little confidence they can’.

The report noted that consumers in EMEA are largely educated to ignore emails and calls requesting details about their bank accounts, although 9% of consumers in Russia and
South Africa still respond.

More on South Africa

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Debit card fraud costs SA R117.7 million

FNB fraudulent transactions down 30%

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Card fraud shocker in South Africa