The South African Banking Risk Information Centre (Sabric) has published its annual statistics on fraud and other crimes impacting the banking sector in 2021, showing a significant jump in SIM-swap fraud in the country, costing the average victim R17,800 per incident.
Despite the uptick in this type of fraud, the data shows that digital channels remain the safest option when dealing with money in South Africa, with physical robberies at ATMs getting worse.
Banking on digital platforms – on app, online and over the telephone – now exceeds all other transaction channels in South Africa, the group said, noting that it is also the safest channel to transact on.
From 2020 to 2021, digital banking fraud incidents decreased by 18% overall. The biggest decline in fraud incidents occurred in mobile banking fraud.
However, while the number of incidents declined, the group said there was a 45% increase in the total gross losses in digital banking in the reporting period.
Sabric CEO Nischal Mewalall said that digital banking products are far safer than in-person banking and enable people to transact from anywhere safely.
Despite this, he warned that as digital banking has gained traction, criminals have adjusted their social engineering tactics to leverage data from social media and data leaks, making their efforts to
manipulate customers difficult to spot.
“Social engineering techniques including, but not limited to, phishing, fishing, smishing, email hacking and business email compromise continued to prevail and were the most prominent fraud methods in the digital banking fraud space. These methods were often used in combination or as one segment of a broader scheme,” the group said.
Although fraudsters obtained their victims’ private information through social engineering techniques, they also exploited vulnerabilities in the management of critical data, and sourced usernames and passwords saved on various devices or multiple applications.
No compromise of banking applications have been confirmed to date, Sabric said, with most app-based fraud occurring due to SIM-swap fraud.
A tactical part of the modus operandi is the interception of transactional verification tokens, like one-time pins (OTPs) and random verification numbers (RVNs). This was achieved through SIM swaps via the unsuspecting bank client’s mobile service provider.
The number of incidents involving SIM swaps increased from 2,686 incidents in 2020 to 4,386 reported in 2021 – a jump of 63%.
The average financial loss per incident went from R12,315 in 2020 to R17,775 reported in 2021, which is a rise of 44.%.
Although online banking fraud makes up the smallest portion of incidents of digital banking crime (20% of reported incidents), it accounts for the second highest portion of gross losses at 45%.
In general, financial losses per incident decreased by 9% between 2020 and 2021. The average value per incident in 2020 was R37,308, compared to R33,781 reported in 2021.
Fraud incidents reported in the mobile banking channel decreased by 47% between 2020 and 2021, with a total of 21,106 incidents reported in 2020, compared to 10,998 incidents, in 2021.
Mobile banking fraud makes up the second largest portion of digital banking crimes, comprising of 38% of reported incidents. Despite this, mobile banking fraud has the lowest gross losses at 4%.
ATM attacks increased by 11% in 2021, with a 17% increase in losses. Incidents where explosives were used increased by 15%, whereas the number of angle grinder incidents decreased by 11%,
from 47 in 2020 to 42 incidents in 2021, the group noted.
Sabric said that it is concerned by the rise in the number of ATM attacks, despite the technology and security measures deployed to make ATMs safer.
Although the industry recorded an 8% decrease in associated robbery incidents overall in 2021, branch-before-deposit incidents increased by 56%, with financial losses in the same category increasing by 85%.
For the first time, Sabric’s annual crime stats publication features application fraud via vehicle and assets, home loans and unsecured fraud – current, cheque and savings accounts, personal and
Vehicle and asset finance fraud increased by 53% in 2021. With regards to home loans, only 12% of reported fraudulent mortgage loan applications were successful, while unsecured loans saw a 4.4% decrease from 2020 to 2021.
With regards to card fraud in 2021, card-not-present (CNP) fraud with a debit card contributed to 55.3% of all card fraud. CNP fraud increased by 31.5% when compared to 2020 and remained a
concern as transactions with online merchants increased.
Mewalall warned that online shopping can be unsafe because fake websites are being used to defraud you of your money or harvest your credit card data. He adds that in certain instances
scammers have even delivered inferior products to create the impression that the website was legitimate.
“We are making inroads in combating banking and financial crime in South Africa. We have trained more than 900 SAPS and NPA personnel on banking products and related evidence. Working closely with the DPCI, we have also established task teams across provinces to aggressively address prioritised banking crime threats,” he said.