Kidnappers on the hunt for banking details in South Africa – and refunds aren’t guaranteed-Luke Fraser

Kidnappers are forcibly accessing their victim’s banking details, but banks will not be held responsible for refunds if they follow the correct procedure.

There has been a rise in kidnappings in South Africa, with the banking division of the National Financial Ombud Scheme (NFO) having received several complaints relating to kidnappings where consumers disclose their confidential banking information under duress.

A possible reason fraudsters are turning to kidnapping is that banks have added various layers of security on their online platforms.

These measures make it hard for fraudsters to get confidential banking information from banking customers.

“When investigating kidnapping-related complaints reported to the NFO, it has been identified that criminals force the banking customer to disclose their online banking and banking app passwords under the threat of violence after kidnapping and detaining them,” said Nerosha Maseti, Lead Ombudsman – Banking Division of the NFO.

“Once criminals gain access to these platforms, they can alter account limits and make unauthorised transfers leading to significant financial losses in addition to the trauma of the kidnapping itself.”

The NFO’s banking division has the power to recommend to the bank that it refund the portion of the customer’s losses that could have been prevented but for the bank’s negligence.

That said, there is little that the NFO can do if the victim gave the all-clear to the bank while under duress.

Case study

In a recent investigation, a complainant was kidnapped and forced to share their online banking conditionals, resulting in just over R100,000 being lost.

The bank’s fraud department flagged the activity and contacted the complainant.

Under duress, the complainant confirmed the validity of the payments.

After being released, the complainant reported the incident to the bank and sought a full refund.

However, the bank rejected the claim, arguing that the complainant had disclosed their confidential banking information.

“The NFO’s investigation considered the contract between the parties,” said Maseti.

“The contractual terms and conditions of the bank’s online banking platform state that if a third party gains access to a customer’s online banking profile, the customer is held liable for all transactions occurring before the bank is notified of unauthorised and/or fraudulent transactions.”

“As part of the investigation, we also considered the actions taken by the bank once the incident was reported. Unfortunately, all the funds transferred out of the complainant’s accounts had already been utilised prior to the bank being made aware of the incident.”

Thus, the bank was not found negligent in mitigating the complainant’s loss, meaning that it could not be held liable for it as there were no legal grounds as per the case.

Although the complainant was a victim of a crime in which the bank was not involved, it did agree to refund a portion of the loss as a gesture of goodwill.

If a banking customer’s details are compromised, they are usually held liable. Once the compromise is reported, the bank is liable, and it has a duty to mitigate any losses.

Prevention tips

With the type of crime increasing, consumers will need to take a few measures to protect themselves and mitigate any significant damages.

The NFO gave the following tips to avoid any hijackings:

• “Be cautious when posting online. Avoid posting sensitive financial information or sudden changes on social media. It is extremely important to be vigilant about what information you share on social media and the perceptions you create about yourself, your family, and your friends.

• Do not draw unwanted attention to yourself. Wearing expensive jewellery, carrying high-end branded items, or carrying other valuables in public may attract unwanted attention.

• Vary your daily routine as often as possible. Diversify your daily activities to reduce predictability. Criminals may monitor predictable routines well before the actual crime is perpetrated in order to ensure that they are vulnerable to criminal targeting.

• Consult your bank. Discuss the measures your bank may offer to help mitigate potential losses if you become a victim of any type of banking fraud. Many banks provide options to tailor your online banking and app experience, including limiting your exposure and risk.

• Consider investment options. Use accounts with restricted access to limit potential losses. In some instances, investing in a notice account may reduce access to your funds, thereby limiting your overall loss.

• Consider insurance. Check if your bank offers duress insurance or trauma counselling services. These may help in tough situations.

Maseti added that consumers who are victims of kidnapping should report the incident to the SAPS and other law enforcement agencies as soon as possible.

source:Kidnappers on the hunt for banking details in South Africa – and refunds aren’t guaranteed – BusinessTech