Fraudsters are leaving South Africans in financial ruin

A totally wrong assumption is costing many South Africans dearly; to the point of financial ruin in some cases. It’s this:

if a person calls them, claims to be from their bank’s fraud division, alerts them to potentially fraudulent transactions on their account, and shares information about their accounts and spending habits, they must be who they say they are.

Here’s how those callers know: thanks to a number of huge data breaches — think TransUnion and Experian — our personal information is “out there” on the dark web, and in the hands of fraudsters.

So they do know our ID numbers, what accounts we have, and their numbers, and they can confidently say things such as: “I see that you don’t use your credit card much...”

That’s the line which had a friend of mine fall for the scam just a few days ago, because it was true. And then the fraudster left her with huge credit card debt.

But what the fraudsters don’t have are our log-ins, or the one-time-pins and other forms of authentication only we can provide to make purchases, or create new beneficiaries.

So they have to make those “vishing” calls to trick us into reading those crucial numbers out to them.

By falling for their deceit, and following their instructions, we “hand them the keys to our safe”.

The banks generally don’t take liability for any of their clients’ losses, not unless they failed to take appropriate action to block their accounts.

Any fraudulent transaction that whisks money out of a defrauded client’s bank account from the second after they make that call to their bank becomes the bank’s liability — that’s the stance of the banking division of the National Financial Ombudsman Scheme.

That’s why it’s crucial to make that call to your bank’s fraud department — save that number in your phone right now, please.

Sadly, such quick action didn’t help a Cape Town woman recently.

One evening in early May, Mercedes, who’s in her mid-50s, got a call from a person claiming to be from “FNB’s fraud department”, saying that her account had been compromised.

“They knew my details and asked me to verify them with some security questions,” she said.

Her answers, of course, gave the fraudster access to her accounts.

“After a few minutes of speaking to this persistent and aggressive person, I realised that something was wrong and ended the call.”

She called her bank, requesting that all her accounts be blocked.

“At that time I received SMSs showing that three amounts were being processed on my credit card,” she said. “R150 000, R54 000 and R16 000. They showed as being “reserved’.”

But those transactions did go through on Mercedes’ credit card, and she now has to pay off that R220 000 debt with interest — R18,000 a month.

“I don't have the income to pay off this fraudulent debt,” she told me.

FNB was able to stop the fraudulent personal bank loan application and revolving credit accounts set up by the fraudsters.

I asked FNB why those three hefty credit card payments “went through” despite Mercedes’ prompt request to block her account, and why it refused to take responsibility for her loss, despite the ombud’s stance.

FNB Card CEO Senzo Nsibande said the bank’s fraud controls declined the first transaction attempt and created an alert which was sent to Mercedes and acknowledged as legitimate activity.

“The subsequent three transactions were all separately authenticated thereafter via 3D Secure notifications.”

And here’s something we need to know about that term “reserved funds”.

“The payment scheme rules, which manage payments, refer to “reserved funds” when a purchase has already been made,” Nsibande said.

“Reserved funds are committed, as the approval to transact has been given, and the agreement to pay then stands.

“These funds cannot be clawed back once the exchange has been authorised, outside scheme rules.”

“A payment of 10% of the claim value was offered by the bank to this customer as partial goodwill for losses incurred,” Nsibande said.

“However, FNB is not liable for the approved transactions.”

Oh, and when my friend posted on Facebook about having fallen for this scam, about half of the scores of responses she got were recommendations from strangers to seek help from cyber experts who would get her money back. Something else to avoid!

• After 10 years of writing this column for Arena Holdings titles, I’m leaving to take on a new challenge. Farewell readers; thanks for all your feedback and for sharing your stories with me. Be careful out there.