KZN credit card fraud shoots up

2008-11-25 00:00

In KwaZulu-Natal, credit card fraud shot up by a massive 83% year on year — a startling contrast to the 30% national average.

Susan Potgieter, head of commercial crimes for Sabric, a section 21 company created by South African banks to combat bank-related organised crime, said yesterday that figures recorded between July 2007 and June 2008 show an 83% increase in overall credit card fraud over the previous 12 months.

KZN “hot spots” were Durban, followed by Pietermaritzburg, Westville, Pinetown and then Empangeni and Richards Bay. Losses were R25 million in Durban and under R5 million in Pietermaritzburg.

Sabric statistics show that Pietermaritzburg “hot-spot suburbs” are Scottsville, Chase Valley, Industrial Park, Hayfields, Mountain Rise and Hilton in that order. Credit card fraud in Umhlanga was more than double that of the nearest suburban “hot spots” in Durban — Springfield Park, Durban North and Rossburgh.

Counterfeit credit card fraud is the main driver of credit card fraud in KZN. While losses from counterfeit credit card fraud averaged R15 million between July 2006 and June 2007, it now stands at about R23 million. Potgieter said that while the increase in counterfeit card fraud mirrors national trends, it also signifies a major change in the modus operandi of credit card criminals in the province. Just a year ago, most credit card fraud in KZN involved the abuse of lost or stolen cards.

“Card skimming and other forms of theft of credit card information play a key part in the production of counterfeit cards,” Potgieter said. Skimming involves copying encoded information on the magnetic strip of a legitimate credit card using a credit card reader (known as a skimming device) and using it to encode counterfeit or stolen cards. They are used to buy items that can be resold for cash, often by prior order.

In 2008, the banking industry in conjunction with the SAPS seized 115 handheld skimming devices. Of these, 18 were found in KZN.

In KZN, fraudulent spending occurs most often in grocery stores, followed by filling stations, liquor stores, equipment and furnishing stores and then restaurants.

Potgieter said card fraud syndicates target busy entertainment areas such as bars and restaurants to set up their card skimming operations. Sabric expects that such operations will be stepped up over the festive season and has launched a public awareness campaign ahead of the busy Christmas shopping period.

She said the best defence against card skimming is for people to make it a practice not to let their cards out of their sight during transactions.

Even though lost and stolen card fraud now occupies second place, Potgieter said it continues to rise in KZN. “An interesting development is that the banking industry is now aggressively rolling out chip cards and PIN cards, which will play a critical role in the reduction of this fraud type.”

Bank customers will soon be provided with credit cards that use a secret PIN to authenticate transactions, making it difficult for card fraudsters to use lost and stolen cards without the PINs.

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