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2014 Credit Card Fraud Statistics

By Tamara Oberholster

Worryingly, South African credit card fraud picked up by 23% in a year period, according to the latest report published by SABRIC.

According to the South Africa Banking Risk Information Centre (SABRIC), the banking industry’s gross fraud losses due to South African-issued credit card fraud increased by 23% in 2014, from R366.8 million in 2013 to R453.9 million.

Debit card gross fraud losses rose 5% from R117.7 million in 2013 to R123.5 million in 2014. The majority of debit card fraud losses relate to counterfeit fraud (65%), followed by lost and/or stolen fraud losses (33%).

Credit card fraud by type

SABRIC says a drastic increase in false application fraud, from R6.2 million to R78.3 million (an astounding 1 143%),
is a major contributor to the increase in overall card fraud. “Criminals abuse online application channels and use false details to open multiple credit card accounts and in doing so, receive a legitimate card and PIN,” SABRIC explains in its 2014 report.

Losses related to false applications on credit card accounts accounted for 17% of the overall credit card fraud losses. Of all false application transactions, 88% occurred within South Africa.

Card Not Present (CNP) card fraud is still a major worry and contributed 42% of the total credit card gross fraud losses in 2014. Losses increased by 7% from R178.7 million in 2013 to R191.7 million in 2014. CNP fraudulent transactions generally take place when orders for goods are placed electronically, or purchases are made via the internet, by mail order or fax. A majority portion (64%) of all CNP credit card losses on South African- issued cards occurred outside the country.

Counterfeit credit card fraud losses decreased by 14% in 2014, contributing 27% to overall losses. Sixty percent of all counterfeit credit card losses occurred outside of South Africa, a decrease of 16% (from R89.3 million to R74.6 million). Although 40% of all counterfeit transactions occurred within South Africa, losses decreased by 12%, from R55.1 million to R48.4 million in 2014. SABRIC notes that counterfeit South African- issued credit cards are frequently being used by criminals in neighbouring countries, including Zambia, Zimbabwe, Botswana, Namibia and Mozambique, mostly in relation to fraudulent cash withdrawals at ATMs.

Lost and/or stolen credit card fraud increased by 64% from R31.7 million in 2013 to R52.2 million in 2014, accounting for 11% of total losses. Fraudulent spend with lost and/or stolen credit cards increased by 64%, with 79% of the transactions occurring in South Africa.

SABRIC says that because of changes in business processes linked to chip and PIN cards, criminals have reverted to modus

operandi such as “shoulder surfing”, card jamming and swapping. “Inevitably, this has led to a visible increase in lost and/or stolen card fraud, similar to the card fraud trends noted in the UK,” the organisation says. “Lost and/or stolen card fraud is currently at the highest level in five years.”

SABRIC lists various industry measures aimed at reducing card fraud, including protection of client data, improvement of internal systems and processes, sharing of information and crime awareness.

It notes that South African banks are continuously investing in new technologies to assist with the detection, prevention and reduction of bank card fraud, and that crime trends are followed closely and adjustments to monitoring systems are made to mitigate associated risks.

SABRIC also urges banks to encourage customers to utilise SMS notifications for transactions on card accounts.

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