Card fraud schemes on the rise

card fraud schemes
Source: BoG Banking, SDI and Emi Fraud Report, 2021
  • Expose need for consumer protection and responsible online practices
  • Unauthorised money transfer, evasion of charges prompt investigation by BoG, card-issuers

Recent developments have shed light on card fraud schemes which have left some customers reeling from unauthorised money transfers and the subsequent avoidance of necessary charges.

The issue has raised concerns among financial institutions and regulatory bodies, prompting investigations including the Bank of Ghana (BoG) and card providers.

The fraudulent schemes revolve around cliques that manipulate unsuspecting individuals into granting access to their cards. Once a group gains control, they exploit the cards to conduct unauthorised money transfers – cunningly sidestepping the charges that are typically associated with such transactions. Multiple banks have reported incidents of customers falling victim to this deceptive practice in recent times.

An insider who spoke to the B&FT on the condition of anonymity, owing to the sensitive nature of the case said: “As you may recall, we chatted about some developments in the use of cards by some customers leading to them being debited then they started raising hell… some people may be victims of a clique hiding behind simple requests to have access to friends’ cards. Then they use these cards for money transfers to avoid paying the necessary charges. Some banks have suffered this in recent times”.

One website that has come under scrutiny is an unauthorised money transfer organisation (MTO) that operates outside the purview of BoG’s regulations. It has been discovered that customers utilised their cards on this platform, unaware of the illicit nature of their transactions. These transactions were initially misclassified as the purchase of large digital goods, masking their true nature as cross-border money transfers – which violate card-issuer rules.

Under normal circumstances, cross-border transactions like these would incur Optional Issuer Fees (OIF), also known as currency conversion fees. However, it has been revealed that these fees were not applied in real time – resulting in inappropriate charges being omitted from the transactions. This irregularity was rectified once the true nature of the transactions came to light.

One of the financial institutions affected by the fraudulent scheme took immediate action by reporting the incident to both the BoG and a card-issuer. Consequently, the authorities have launched investigations into the matter to ascertain the full extent of the fraud and hold those responsible accountable.

Furthermore, due to involvement of the country’s hard-earned foreign currency in these unauthorised transfers – which could be considered economic crimes, the Economic and Organised Crime Office has been alerted in compliance with the Economic and Organised Crime Act, 2012, Act 804.

Responses from the BoG, EOCO and other relevant stakeholders were not ready at the time of filing this report.

In light of these disconcerting events, consumer protection and responsible online practices have taken centre-stage. Experts urge individuals to exercise caution and take necessary precautions to safeguard their cards and personal finances.

To protect themselves from falling prey to fraudulent schemes, consumers have been advised not to share their card details with anyone, and to verify the authenticity of requests for card access. Additionally, it is crucial that they adopt responsible online behaviour; such as using secure payment platforms and conducting thorough background checks on websites and organisations before engaging in financial transactions.

This comes at a time when digital fraud cases are on the ascendancy following the sharp rise in electronic payments. In a similar development, in 2021 the financial sector witnessed a substantial surge in fraud cases – resulting in a loss of GH¢61million compared to GH¢25million in 2020.

This represents a staggering 144 percent increase year-on-year. The primary contributors to this concerning figure were various types of fraud: namely automated teller machine (ATM) card/point of sale (POS) fraud; impersonation; lending and credit fraud; forgery and manipulation of documents; cash suppression and E-money fraud.

Specifically, ATM card/POS-related fraud accounted for the highest loss, totalling GH¢22.99million. Universal banks accounted for nearly all the loss for ATM/POS fraud. The banks recorded a rate of 99.98 percent, with 0.02 percent for the Savings and Loans sector.

Negligence on the part of some customers and weaknesses in the systems of certain financial institutions were identified as contributing factors to this alarming trend.

The need for improved customer vigilance and stronger security measures within financial institutions has become more evident than ever, in order to combat these fraudulent activities and mitigate the financial losses associated with them.

Also – according to recent reports collated by – credit card issuers, merchants and consumers collectively incurred a staggering credit card fraud loss of US$28.58billion in 2020. Specifically, global general-purpose brand cards experienced a credit card fraud loss amounting to US$25.27billion during the same year.

Alarmingly, projections indicate that the global loss attributed to credit card fraud is expected to surge to an estimated US$49.32billion by 2030. These figures highlight the increasing prevalence and financial impact of credit card fraud, emphasising the urgent need for enhanced security measures and fraud prevention strategies in the industry.


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