Online banking fraud still SA's biggest problem

More complaints settled in favour of banks

Internet banking fraud was the biggest source of complaints about banks for the third year in a row, but in 80% of these cases the Ombudsman for Banking Services found in favour of the banks.

Internet banking, ATM- and credit card- fraud account for 48% of complaints to the banking ombud’s office. Picture: 123RF
Internet banking, ATM- and credit card- fraud account for 48% of complaints to the banking ombud’s office. Picture: 123RF

Internet banking fraud was the biggest source of complaints about banks for the third year in a row, but in 80% of these cases the Ombudsman for Banking Services found in favour of the banks.

This is according to the ombud’s latest annual report released yesterday.

ATM-related complaints were the second-biggest category of complaints the ombud dealt with, followed by complaints concerning credit cards.

These were also the top three types of complaints in the previous year under review.

Internet banking, ATM- and credit card- fraud account for 48% of complaints to the banking ombud’s office, the ombud says.

“We have continued to receive a steady, daily stream of complaints from people who have been victims of fraud and it seems the end of this trend is nowhere in sight,” ombud Reana Steyn says in the 2018 annual report, which was released yesterday.

As banks are increasingly offering easy-to-use accounts you can operate from your phone or computer, fraudsters too have upped their attempts to fleece you, often by tricking you into revealing crucial bank details.

When banks can prove you fell for a scam and gave away your account PIN, password or one-time pin (OTP), your complaint is unlikely to succeed.  

However, if you realise you have been a victim of fraud, your bank should help you mitigate your loss. 

The report shows that the ombud finalised 1,349 complaints concerning internet banking, 265 (or 20%) of which went in favour of the consumer. In only 14% of the 1,053 ATM-related complaints finalised in 2018, the ombud found in favour of consumers. And in 26% of cases relating the credit card complaints the ombud found in favour of consumers.

In all of these categories, complaints are increasingly being settled in favour of the banks, or against consumers, as compared with the previous year.

In the previous year, the ombud finalised more internet banking complaints (a total of 1,377) and found in favour of consumers in more instances (23%).

Likewise, in 2017 the ombud finalised 1,115 ATM-related complaints and in 18% of cases found in favour of the consumer.

In 2017, there were fewer credit card complaints (764), but a higher number of those were found in favour of the consumer (33%).   

In a press release issued by the ombud yesterday, Steyn says fraudsters and hackers seem to be working around the clock to create fake copies of bank websites and impersonate bank staff.

They send bank customers emails and contact them via telephone. The emails and calls are so convincing that many customers get taken in, she says.

Fraudsters and hackers seem to be working around the clock to create fake copies of bank websites and impersonate bank staff.
Banking ombud Reana Steyn

“This happens despite all the warnings issued by banks and our office. Thousands of customers are fooled by the scammers and in the process they lose millions of rands. In many cases victims disclose their personal banking details, passwords and PIN numbers which are the direct cause of the loss, and in those instances the banks are not in a position to issue a refund,” she says.  

The ombud’s annual report does not report on the losses suffered by consumers in any category of crime.

Treating Customers Fairly

There is a new approach to regulation that requires financial institutions including banks, to treat you fairly by meeting six Treating Customers Fairly (TCF) outcomes.

The ombud’s latest annual report shows that in most cases (97.7% of complaints to the ombud), customers were not satisfied that they had been provided with clear information or kept appropriately informed before, during and after signing up for a bank service.

This was particularly pronounced in complaints relating to internet banking, ATMs, credit cards, as well as those relating to personal loans, mortgage finance and current accounts.

Banks also scored badly when it came to complaints about failing to meet expectations and providing service of an acceptable standard.

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