PAGE: 1 // 42 www.sabric.co.za CARD FRAUD BOOKLET Protect your card and information at all times
Table of Contents Executive Summary 05 21 Card Fraud in the UK Qualification of Information Payments Association of South Africa (PASA) 07 08 23 ATM Crime Overview of ATM Transactions (Cash Withdrawals) for Credit Card Fraud () Overview of ATM Transactions (Cash Withdrawals) for Debit Card Fraud () National Overview of Credit Card Fraud (2010-) Credit Card Fraud Distribution Credit Card Gross Fraud Loss in South Africa Geographical Distribution of Credit Card Fraud National Overview of Debit Card Fraud (2010-) Debit Card Fraud Distribution Debit Card Gross Fraud Loss In South Africa Geographical Distribution of Debit Card Fraud 09 25 15 Description of Fraud Types Lost And/Or Stolen Card Fraud Not Received Issued Card Fraud (NRI) False Application Card Fraud Counterfeit Card Fraud Account Takeover Card Fraud Card Not Present Card Fraud (CNP) PAGE: 3 // 42 PAGE: 4 // 42
Executive 46.6% Summary +1.0% -8.5% The banking industry s gross fraud losses using South African (SA) issued credit cards increased by 1.0%, from R434.0m in to R436.7m in. Gross fraud losses due to fraud perpetrated with SA-issued debit cards decreased by 8.5%, from R373.9m in to R342.2m in. of all credit card fraud losses occurred in South Africa. 72.1% of all debit card fraud losses occurred in South Africa. Cards fraudulently obtained by criminals were used to conduct cash withdrawals at ATMs. Almost half (49.1%) of all fraudulent debit card transactions were related to ATMs, while 4.6% of credit card transactions were attributed to ATM withdrawals. Trends per fraud type in respect of credit and debit card fraud are as follows: / Credit Card Debit Card Overall Gross Fraud Loss Lost and/or stolen Counterfeit Provinces mostly affected by card fraud (credit and debit cards) are GP Gauteng KZN KwaZulu-Natal CNP (Card Not Present) WC Western Cape PAGE: 5 // 42 PAGE: 6 // 42
Qualification of Information The credit and debit card fraud information utilised in this report was provided by African Bank, albaraka Bank, Bank of Athens, Barclays Africa Group, Bidvest, Capitec Bank, First National Bank, Investec, Mercantile Bank, Nedbank, Postbank, ubank, Sasfin, Standard Bank of South Africa as well as Amex, Diners Club and Virgin. The statistics used in the report cover the period from 01 January to 31 December. For the comparative analysis, the abovementioned period was compared to similar periods from 2010, with a specific focus on and. The information set used was as follows: All credit and debit card gross fraud losses reported to SABRIC as at the 12th of March 2018. All calculations are based on the date that the fraudulent transaction occurred. All fraud losses mentioned in this booklet refer to gross fraud losses and do not relate to the net losses suffered by the banking industry. Fraud loss figures are rounded to the nearest R1 million, unless otherwise stated and therefore, the sum of the separate losses (for example per loss category/fraud types/provinces) may differ from the rounded loss reflected. PASA Payments Association of South Africa Card payments in South Africa continue to be a predominant part of the National Payments System in an evolving payments ecosystem. The drive to replace magstripe cards with more secure and improved EMV chip and PIN capable cards continues, with nearly all credit cards being issued with them, as well as the majority of debit cards in the domestic market. The percentage of card-present transactions which are EMV compliant has increased from 90.19% to 90.89% in Africa and the Middle East. This is currently only bettered by certain European zones that continue to take the lead in card-present EMV transactions. The United States has made significant progress with the implementation of chip cards, boasting an increase from 18.61% to 41.21% card-present EMV transactions in. In the Africa and Middle East region, EMV chip card deployment and adoption rates have increased from 184 million cards in to 219 million cards in. This equates to an adoption rate increase from 68.7% in to 74.8% in. The adoption rates are still way ahead of the average worldwide EMV chip card adoption rate of 54.6%. Even though the statistics are encouraging, card fraud remains a concern with periodic data breaches, especially in the card-not-present environment. The South African industry has however seen continued efforts to ensure the effectiveness and robustness of 3D Secure for e-commerce transactions. In addition, the market is considering the benefits that 3D Secure 2.0 would offer in securing transactions, as this provides significantly more transactional data richness for users. As the world of payments continues to embrace digital platforms and channels, new security technologies will play a critical role in mitigating risk. An increasing number of players worldwide are adopting the practice of tokenisation where a token is issued to a user to process transactions rather than the actual card details. This not only augments e-commerce security and reduces fraud risk, but provides additional opportunities such as foundational innovation capabilities for digital payments. Contactless payments have continued to grow in South Africa with several merchants deploying contactless acceptance devices, complimented by the issuance of an ever-increasing number of contactless enabled cards. This technology has further seen cross-pollination into tokenised contactless mobile payments with the increasing number of contactless enabled mobile devices. With the drive to explore further payment opportunities to enable a frictionless customer experience and minimise cost for payment players alike, QR Code payments have continued to become a popular payment alternative. Standardised international specifications for QR Codes are being developed to enhance the security of these transactions. The South African payments industry will continue to pursue safe, secure and relevant payment systems in this ever-changing global marketplace by utilising joint initiatives an aligned to international best practices. PAGE: 7 // 42 PAGE: 8 // 42
Credit Card Fraud Overview of Credit Card Fraud (2010 - ) +1.0% Increase of gross fraud losses due on SA-Issued credit cards Gross fraud losses on SA-issued credit cards increased by 1.0%, from R434.0m in to R436.7m in. The graphs below represent the industry s gross fraud losses on SA-issued credit cards, regardless of the physical location of the fraudulent transaction. SA-issued credit card gross fraud losses per fraud type, all countries Fraud Type 2010 Lost and/or Stolen R26.1m R15.9m R9.7m R8.5m R10.7m R12.8m R17.8m R25.7m NRI (Not Received Issued) R1.7m R1.2m <R1.0m <R1.0m <R1.0m R1.0m R3.2m <R1.0m False Application Fraud R2.4m R15.5m R19.4m R13.9m R93.5m R8.7m R4.4m R5.5m Counterfeit R97.1m R158.2m R85.1m R116.2m R117.1m R129.2m R108.9m R83.6m Gross fraud loss on SA-issued credit cards (All countries 2010 to ) Account Takeover <R1.0m <R1.0m R1.5m R2.4m <R1.0m R1.8m R3.1m R2.5m CNP (Card Not Present) R81.2m R179.7m R211.8m R238.0m R240.6m R249.6m R296.4m R318.4m 2010 R209.0 R329.9 R372.0 R379.6 R463.4 Credit Card Fraud Distribution Credit card gross fraud losses on SA-issued credit cards (2010 to ), divided between merchant locations inside and outside South Africa R403.3 R434.0 R436.7 0 100 200 300 400 500 250 200 150 R125.7 R141.0 R230.9 R168.6 R161.3 R233.3 R146.3 R238.0 R225.4 R226.6 R176.8 R219.8 R214.2 R233.2 R203.5 Percentage distribution per fraud type on SA-issued credit cards during 100 50 R83.3 Lost&Stolen NRI FalseApp 5.9% 0.2% 1.3% Counterfeit TakeOver CNP 19.1% 0.6% 72.9% 0 2010 Transactions outside South Africa Transactions in South Africa PAGE: 9 // 42 PAGE: 10 // 42
Credit Card Fraud Overview of Credit Card Fraud (2010 - ) SA-issued credit card gross fraud losses per fraud type, top 10 African countries Country Number of transactions Gross fraud loss Lost and/or Stolen Counterfeit CNP KENYA 254 R 2 943 694 3 85 166 In, 50.6% of all credit card gross fraud losses occurred at merchants outside the borders of South Africa. This percentage increased to 53.4% in. The remaining 46.6% of transactions occurred at merchants in South Africa. CNP fraud was the leading contributor to the gross fraud losses on SA-issued credit cards in, with 72.9% of the overall credit card gross fraud loss (R436.7m) attributed to CNP fraud. CNP credit card gross fraud losses increased by 7.4% from R296.4m in to R318.4m in. A total of R200.0m (85.8%) of the overall gross fraud losses (R233.2m) occurring outside South Africa can be attributed to CNP credit card fraud. Counterfeit credit card fraud decreased by 23.2% when compared to. The losses associated with counterfeit credit card fraud decreased from R108.9 in to R83.6m in. Although the gross fraud losses decreased, 19.1% of the total gross fraud loss can still be attributed to counterfeit card fraud. Fraudulent spend using lost and/or stolen credit cards increased by 44.5% during and amounted to R25.7m in total. Lost and/or stolen cards are mainly used in South Africa with only 23.9% of the losses related to transactions outside South Africa. SA-issued credit cards were used in other African countries in to the value of R11.8m. The top 10 African countries that were targeted are reflected to the right. ETHIOPIA 232 R 2 075 865 14-218 ZIMBABWE 233 R 1 670 759 10 57 163 ZAMBIA 183 R 1 427 516 55 87 41 MOZAMBIQUE 219 R 972 674 5 145 69 MAURITIUS 193 R 927 719 10 5 178 NAMIBIA 101 R 375 258 28 2 71 MALAWI 56 R 327 379 9 1 46 BOTSWANA 78 R 221 365 26 4 48 CAMEROON 38 R 168 553 1 28 9 Five cross border countries (excluding African countries) with the highest recorded financial losses due to CNP and Counterfeit fraud on SA-issued credit cards, during were: 53.4% 46.6% Ireland United Kingdom Gross credit card fraud losses that occurred at merchants outside the borders of SA in. Gross credit card fraud losses that occurred at merchants inside of SA in. United States Malta India China United Arab Emirates Counterfeit CNP Most fraudulent CNP transactions are purchases related to the travel industry. Indonesia PAGE: 11 // 42 PAGE: 12 // 42
Credit Card Fraud Overview of Credit Card Fraud (2010 - ) Credit Card Gross Fraud Loss in South Africa Credit card gross fraud losses in South Africa on SA-issued cards used in South Africa, decreased by 5.0% from R214.2m in to *R203.5m in. Lost and/or stolen credit card gross fraud losses accounted for 9.6% of the total credit card gross fraud losses inside South Africa during. The gross fraud losses associated with lost and/or stolen credit cards increased by 32.5% from R14.8m () to R19.6m (). Criminals mostly steal, swop and set up card entrapment devices at ATMs and then shoulder surf the victim to obtain their PIN. The cards are then used to withdraw cash from an ATM. An increase has been seen where the ATM transaction is followed by a high value transaction at a merchant. Decreases were observed for NRI (Not Received Issued) and account takeovers for. Measures put in place during to mitigate this risk are yielding positive results. The gross fraud loss associated with counterfeit credit cards used inside South Africa decreased by 26.2%, from R78.5m in to R57.9m in. Despite the decrease, counterfeit card fraud remains the second biggest contributor (28.5%) to the overall gross fraud loss on SA-issued credit cards used in South Africa. The majority (69.2%) of fraudulent losses on counterfeit cards still occur inside South Africa. Gross fraud loss for CNP fraud increased by 6.7%, from R110.9m in to R118.3m in. CNP comprises 58.2% of the total gross fraud loss (R203.5m) inside South Africa. SA-issued credit card gross fraud loss, inside SA by fraud type (2010 to ) 86.3% Gauteng, Western Cape and KwaZulu-Natal accounted for 86.3% of all credit card gross fraud losses in South Africa. Geographical Distribution of credit card fraud Gauteng, Western Cape and KwaZulu-Natal accounted for 86.3% of all credit card gross fraud losses in South Africa, with the other 6 provinces accounting for the remaining 13.8%. The highest gross fraud loss was reported for Gauteng (55.6%) followed by the Western Cape (18.2%) and then KwaZulu-Natal with 13.7%. Decreases occurred in the following provinces: Eastern Cape (12.6% from R10.2m to R9.0m), Gauteng (8.6% from R108.4m to R99.0m), Mpumalanga (40.8% from R6.4m to R3.8m) and Northern Cape (13.6% from R289 620 to R250 286). The biggest increases were noted in the Free State (13.0%), followed by KwaZulu-Natal (6.2%) and North West (3.1%) when comparing and. Provincial geographical distribution of credit card gross fraud losses 2010 Eastern Cape R1.6m R2.0m R3.0m R2.5m R2.2m R3.8m R10.2m R9.0m Free State R1.6m <R1.0m R1.3m <R1.0m <R1.0m <R1.0m R1.5m R1.7m Gauteng R61.2 R99.3m R75.4m R65.3m R95.9m R91.6m R108.4m R99.0m KwaZulu-Natal R7.9m R8.7m R7.9m R9.2m R12.1m R14.7m R23.0m R24.5m Limpopo R2.2m R2.5m R2.1m R2.3m R3.8m R4.0m R4.3m R4.3m Mpumalanga R2.1m R1.2m R1.7m R2.1m R2.6m R4.1m R6.4m R3.8m Northern Cape <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m North West R1.6m R1.9m R1.5m R2.2m R2.0m R1.4m R3.3m R3.4m 120 100 80 60 CNP Account Takeover Counterfeit False Applications Western Cape R15.4m R41.9m R39.6m R32.4m R39.7m R33.6m R31.5m R32.4m Provincial geographical distribution during 40 20 0 2010 NRI (Not Received Issued) Lost / Stolen Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo 5.0% 1.0% 55.6% 13.7% 2.4% Mpumalanga Northern Cape North West Western Cape 2.1% 0.1% 1.9% 18.2% *12% of the provincial distribution data could not be determined due the virtual nature of CNP which cannot be linked to a physical location in South Africa. PAGE: 13 // 42 PAGE: 14 // 42
Debit Card Fraud Overview of Debit Card Fraud (2010 - ) SA-issued debit card gross fraud losses per fraud type, all countries Fraud Type 2010 Lost and/or Stolen R14.3m R17.9m R22.1m R57.1m R106.3m R134.3m R213.2m R176.6m NRI (Not Received Issued) <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m R1.6m <R1.0m <R1.0m -8.5% Decrease in gross fraud losses due to fraud perpetrated with SAissued debit cards. Gross fraud losses due to fraud perpetrated with SA-issued debit cards decreased by 8.5%, from R373.9m in to R342.2m in. The graph below depicts the industry s total gross fraud losses on SA-issued debit cards, irrespective of the geographical location of the fraudulent transaction. False Application Fraud <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m Counterfeit R202.5m R372.0m R292.3m R214.2m R155.9m R128.2m R96.3m R65.3m Account Takeover <R1.0m <R1.0m <R1.0m <R1.0m <R1.0m R1.6m R2.6m <R1.0m CNP (Card Not Present) R7.9m R28.9m R30.8m R47.9m R61.7m R78.9m R61.0m R98.0m Gross fraud loss on SA-issued debit cards (All countries 2010 to ) 2010 R226.2 R422.1 R348.8 72.1% Debit card gross fraud losses that occurred within South Africa in, compared to 78.6% in.. Debit Card Fraud Distribution During, 72.1% of debit card gross fraud losses occurred within South Africa compared to 78.6% in. The remaining 27.9% of the losses which occurred outside South Africa showed an increase compared to the 21.4% reported in. R320.5 R325.3 R 345.3 R342.2 R373.9 Debit card gross fraud losses on SA-issued debit cards (2010 to ) divided between merchant locations inside and outside South Africa 400 R364.9 0 100 200 300 400 500 350 300 250 R301.4 R230.0 R228.7 R244.2 R293.8 R246.6 Percentage distribution per fraud type on SA-issued debit cards during Lost&Stolen NRI FalseApp 51.6% 0.2% 0.1% Counterfeit TakeOver CNP 19.1% 0.3% 28.6% 200 150 100 50 0 R35.2 R191.0 2010 R57.3 R47.4 R90.4 R96.7 R101.0 R80.1 R95.5 Transactions outside South Africa Transactions in South Africa PAGE: 15 // 42 PAGE: 16 // 42
Debit Card Fraud Overview of Debit Card Fraud (2010 - ) SA-issued debit card gross fraud losses per fraud type, top 10 African countries Country Number of transactions Gross fraud loss Lost and/or Stolen Counterfeit CNP ZIMBABWE 360 R 2 306 892 20 103 237 A gross fraud loss of R176.6m was reported for lost and/or stolen debit card fraud in. Of the total gross fraud loss for lost and/ or stolen cards mentioned above, R173.6m (which is 98.3%) occurred in South Africa. Lost and/or stolen debit card fraud losses accounted for 51.6% of the losses and were the main contributor to fraud losses on SA-issued debit cards. Debit card gross fraud losses related to CNP increased by 60.7% from R61.0m to R98.0m if one compares to. CNP fraud contributed 28.6% to the fraud losses on SA-issued debit cards in, with R68.0m of losses occurring outside South Africa. There is a correlation between the rise in CNP fraud and the increase of fraud occurring outside South Africa. It is expected that debit card CNP fraud will continue to increase. Gross losses for counterfeit debit card fraud decreased by 32.2% from R96.3m in to R65.3m in. 63.0% of counterfeit debit card transactions occurred within South Africa amounting to R41.1m. With CNP debit card fraud on the rise, counterfeit debit card fraud is now the third largest contributor to overall debit card gross fraud loss. SA-issued debit cards were used in other African countries in to the value of R7.2m. The top 10 African countries that were targeted are displayed to the right: MOZAMBIQUE 448 R 1 820 675 10 361 77 ZAMBIA 203 R 1 405 777 11 169 23 KENYA 79 R 401 003 2 48 29 LESOTHO 140 R 267 528 12 109 2 NAMIBIA 223 R 197 728 215 3 5 MAURITIUS 80 R 196 430 3 2 75 ETHIOPIA 11 R 128 686 0 3 8 SWAZILAND 33 R 117 686 3 30 CAMEROON 49 R 85 021 0 29 20 The following five countries (excluding African countries) with the highest recorded financial losses due to CNP and Counterfeit card fraud using SA-issued debit cards during were: 51.1% +60.7% Ireland United Kingdom of losses were due to lost and/or stolen debit card fraud. Increase in debit card gross fraud losses related to CNP. United States Luxembourg Cyprus China India Counterfeit CNP Indonesia PAGE: 17 // 42 PAGE: 18 // 42
Debit Card Fraud Overview of Debit Card Fraud (2010 - ) Debit Card Fraud Loss in South Africa Gross losses for debit card fraud on SA-issued cards used in South Africa decreased by 16.1% from R293.8m in to *R246.6m in. Gross fraud losses for lost and/or stolen debit cards decreased by 15.7% from R206.0m in to R173.6m in. During, 70.4% of the total fraud losses for debit cards in South Africa were attributed to lost and/ or stolen debit card fraud losses. Criminals are using modus operandi like stealing, swopping and card entrapment accompanied by shoulder surfing, to obtain the card and PIN from a victim. This is the first year that we have seen a decrease for losses relating to lost and/or stolen debit card fraud since. Debit card gross fraud losses related to CNP increased by 66.9% in South Africa. CNP fraud contributed 12.2% to the total fraud losses on SA-issued debit cards in South Africa in. Of the total gross fraud losses related to CNP during (R98.0m), 30.6% of the value of R30.0m occurred in South Africa. Decreases were observed for NRI (Not Received Issued) in. Measures implemented during to mitigate this risk are showing positive results. Gross fraud losses associated with counterfeit debit card fraud in South Africa decreased by 38.2% from R66.5m in to R41.1m in. The fraud losses related to counterfeit fraud have been consistently decreasing since and are currently at their lowest level since. SA-issued debit card gross fraud losses per fraud type (2010 to ) 350 76.1% Gauteng, KwaZulu-Natal, Western Cape and Eastern Cape accounted for 76.1% of debit card gross fraud losses in South Africa. Geographical Distribution of debit card fraud Gauteng, KwaZulu-Natal, Western Cape and Eastern Cape accounted for 76.1% of debit card gross fraud losses in South Africa. Gauteng accounted for 40.6%, followed by KwaZulu-Natal 16.5%, Western Cape 10.1% and Eastern Cape 8.9%. The remaining provinces accounted for 23.9% of the gross fraud losses. Except for Limpopo, all provinces showed a decrease during. Provincial geographical distribution of debit card gross fraud losses 2010 Eastern Cape R15.1m R39.5m R23.7m R15.9m R15.4m R19.0m R25.3m R20.1m Free State R4.7m R10.4m R9.5m R8.8m R8.6m R8.4m R11.4m R8.9m Gauteng R59.5m R126.9m R125.2m R94.7m R92.3m R100.7m R112.8m R95.3m KwaZulu-Natal R24.0m R50.1m R50.4m R33.7m R28.8m R33.2m R50.1m R38.6m Limpopo R3.9m R8.1m R11.5m R11.6m R12.4m R13.2m R14.9m R16.7m Mpumalanga R5.7m R12.5m R15.1m R12.0m R10.7m R14.1m R17.5m R13.6m Northern Cape <R1.0m R1.3m R1.0m R1.3m R2.1m R2.3m R3.6m R2.5m North West R4.1m R8.7m R14.1m R11.7m R13.6m R12.2m R18.1m R14.5m Western Cape R9.7m R29.6m R31.2m R25.4m R28.5m R27.8m R26.8m R23.7M 300 CNP 250 200 150 100 50 Account Takeover Counterfeit False Applications NRI (Not Received Issued) Lost / Stolen Provincial geographical distribution during Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo 8.9% 3.8% 40.6% 16.5% 7.1% Mpumalanga Northern Cape North West Western Cape 5.8% 1.0% 6.2% 10.1% 0 2010 *5% of the provincial distribution data could not be determined due the virtual nature of CNP which cannot be linked to a physical location in South Africa. PAGE: 19 // 42 PAGE: 20 // 42
Card Fraud in the UK Card fraud losses on UK-issued cards (2010 to ) 2010 365.0 According to Financial Fraud Action UK, gross fraud losses on UK cards increased by 9% from January to December, when compared to the same period in. Lost and/or stolen card fraud increased by 30% with significant increases seen in the last two years. Total fraud losses of 15.61% can be attributed to lost and/or stolen cards. It is of interest to note that the UK is experiencing the same modus operandi as in South Africa where stolen cards are used for cash withdrawals. An increase of 32% was reported for ATM cash withdrawals from to and is described as follows; the rise is due to an increase in distraction thefts and card entrapment at ATMs, with fraudsters obtaining both the card and the PIN which enables them to commit fraud at cash machines. Card not present (CNP) fraud accounted for 69.9% of the total losses and an increase of 9% was reported when compared to. Counterfeit fraud accounted for 6% of the total losses and showed a 19% decrease. Figures in respect of fraud related to contactless cards were included in the report. A total of 6.9m was reported for. This figure amounts to 1.1% of the total losses reported. Although figures are not yet available for South Africa, this could be an indication of what s to come. The same trends observed in the UK are being seen in South Africa. Gross fraud for CNP is increasing and is the main contributor to fraud losses. Lost and/or stolen card fraud is problematic in both countries with the compromise of PINs being the common denominator.* 341.0 388.0 450.0 479.0 568.0 618.0 0 100 200 300 400 500 600 700 All Figures in ( ) Millions Similar to the UK trend, a decrease in counterfeit fraud was observed in South Africa during. *SOURCE https://www.financialfraudaction.org.uk/wpcontent/uploads//07/-year-end-fraud-bulletin.pdf PAGE: 21 // 42 PAGE: 22 // 42
ATM Crime 47.4% In South Africa most of the transactions occurred in Gauteng (47.4%) followed by KwaZulu-Natal (6.3%) and Western Cape (6.0%). Overview of ATM transactions (cash withdrawals) for Credit Card Fraud During, R19.9m (4.6%) of gross fraud losses on all SA-issued credit cards were reported as cash withdrawals at ATMs. R11.9m can be attributed to counterfeit card fraud which accounts for the majority of losses, followed by lost and/ or stolen cards which amounted to R4.9m. The bulk of counterfeit fraud transactions occurred in Indonesia. 35.1% ATM transactions on debit cards are more widespread across the different provinces, however most of the transactions occurred in Gauteng (35.1%) followed by KwaZulu-Natal (17.7%) and Eastern Cape (11.0%). Overview of ATM transactions (cash withdrawals) for Debit Card Fraud During, R167.8m (49.1%) of gross fraud losses on all SA-issued debit cards were reported as cash withdrawals at ATMs. Most losses were attributed lost and/or stolen cards and amounted to R138.8m. A total of 78.6% of lost and/or stolen cards were utilised to obtain cash from ATMs. A further R27.4m were the result of counterfeit cards used at ATMs. Most counterfeit fraud transactions, as with credit cards, occurred in Indonesia where fraudsters utilised card information obtained from skimming devices. Gross fraud loss on SA-issued credit cards - ATM compared to other merchants (All countries ) Gross fraud loss on SA-issued debit cards - ATM compared to other merchants (All countries ) ATM Other 4.6% ATM 49.1% 95.4% Other 50.9% Provincial geographical distribution on SA-issued credit cards during Provincial geographical distribution on SA-issued debit cards during Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo 2.1% 1.5% 47.4% 6.3% 1.5% Mpumalanga Northern Cape North West Western Cape 2.6% 0.2% 2.1% 6.0% Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo 11.0% 5.0% 35.1% 17.1% 4.9% Mpumalanga Northern Cape North West Western Cape 6.7% 1.4% 7.2% 8.0% PAGE: 23 // 42 PAGE: 24 // 42
Description of Fraud Types Lost and/or stolen card fraud Definition Lost card fraud is a fraudulent transaction that occurs on a valid issued card after the cardholder has lost his/her card, and is no longer in possession of it. Stolen card fraud is performed on a valid issued card that has been stolen from a legitimate owner. Lost and/or stolen card fraud Trend Lost and/or stolen credit card fraud increased by 44.5% from R17.8m in to R25.7 in and accounted for 5.9% of the total gross fraud losses on credit cards. An increase has been observed since. Most of these fraudulent transactions (76.1%) occurred inside South Africa. The highest gross fraud losses reported on lost and/or stolen credit cards were because of fraudulent cash withdrawals and purchases at toll plazas, service stations, liquor stores and family clothing stores. Lost and/or stolen debit card fraud (2010 to ) 2010 R14.3 R17.9 R22.1 R57.1 R106.3 R134.3 R213.2 R176.6 0 50 100 150 200 250 Lost and/or stolen credit card fraud (2010 to ) 2010 R26.1 R15.9 R9.7 R8.5 R10.7 R12.8 R17.8 R25.7 0 5 10 15 20 25 30 Lost and/or stolen debit card fraud decreased by 17.2% from R213.2m in to R176.6m in. This is the first year since 2009 that a decrease has been observed. Lost and/or stolen debit cards accounted for 51.6% of the total gross fraud losses on debit cards. Almost all (98.3%) of the gross fraud losses occurred inside South Africa. The highest gross fraud losses for lost and/or stolen debit card fraud were cash withdrawals followed by purchases at toll plazas, liquor stores, grocery stores and clothing stores. In many cases lost and/or stolen cards were obtained by interfering with customers while transacting at an ATM. Criminals distracted victims by offering them assistance during which the card and PIN was obtained. The card was used repeatedly at ATMs until the daily cash withdrawal limit on the card had been reached after which, high value transactions were made at merchants. PAGE: 25 // 42 PAGE: 26 // 42
Description of Fraud Types Not received issued card fraud (NRI) Definition Not received issued card fraud relates to the interception of a genuinely issued card before it reaches the customer. Imposters then use intercepted cards fraudulently. Not received issued card fraud (NRI) Trend Gross fraud losses for not received issued credit card fraud decreased by 76.4%, from R3.2m in to R761 763 in. Gross losses for credit card fraud associated with NRI accounted for 0.2% of overall credit card losses. Mitigation measures implemented by the banks produced positive results in. Banks continue to improve their processes in respect of card collections and PIN activations. Not received issued credit card fraud (2010 to ) 2010 R0.4 R0.5 R0.2 R0.3 R0.3 R1.6 R0.6 R0.6 0.0 0.5 1.0 1.5 2.0 Not received issued credit card fraud (2010 to ) 2010 R1.7 R1.2 R0.6 R0.2 R0.1-76.4% Decrease of gross fraud losses for not received issued credit card fraud from to. Not received issued debit card gross fraud losses decreased by 6.5%, from R618 216 in to R577 990 in. Debit card gross fraud losses associated with NRI cards accounted for 0.2% of overall debit card fraud loss. R1.0 R3.2 R0.8 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5-6.5% Decrease of not received issued debit card gross fraud losses from to. PAGE: 27 // 42 PAGE: 28 // 42
Description of Fraud Types False application card fraud Definition False application fraud occurs when a fraudulent transaction is carried out on an account where the card was acquired by falsifying a credit application. False application credit card fraud (2010 to ) False application card fraud Trend The gross fraud losses associated with transactions on a credit card obtained through a false application increased from R4.4m to R5.5m (24.4%) and accounted for 1.3% of the overall credit card gross fraud losses. However, this increase is not as significant as what was reported in. False application debit card fraud (2010 to ) 2010 R0.2 R0.2 R0.7 R0.6 R0.6 R0.1 R0.2 R0.3 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2010 R2.4 R15.5 R19.4 R13.9 R93.5 R8.7 R4.4 R5.5 0 20 40 60 80 100 The gross fraud loss on debit cards related to false applications increased from R167 218 to R259 823 (55.4%) when compared to to. These losses accounted for 0.1% of the total gross fraud loss on debit cards. PAGE: 29 // 42 PAGE: 30 // 42
Description of Fraud Types Counterfeit card fraud Definition Counterfeit card fraud is perpetrated with a card that has been illegally manufactured using information stolen from the magnetic strip of a genuinely issued card. In some instances, lost and/or stolen cards and/or old cards are re-encoded with information stolen from a genuine card for purposes of committing counterfeit card fraud. The information needed for a counterfeit card is usually stolen through card skimming. Counterfeit credit card fraud (2010 to ) 2010 R97.1 R85.1 R83.6 Counterfeit card fraud Trend Counterfeit credit card fraud decreased from R108.9m in to R83.6m in. This amounts to a decrease of 23.2%. Transactions on counterfeit credit cards contributed 19.1% to the overall credit card gross fraud loss. Most of the counterfeit credit card fraud losses occurred inside South Africa (69.2%) with the remaining 30.8% occurring outside South Africa. During, Indonesia was targeted for cash withdrawals using counterfeit cards. The highest gross fraud losses in respect of counterfeit credit card fraud related to cash withdrawals at ATMs, purchases at grocery stores, supermarkets, service stations, department stores and liquor stores. R116.2 R117.1 R108.9 R129.2 R158.2 0 50 100 150 200 Counterfeit debit card fraud (2010 to ) 2010 R202.5 R65.3 R96.3 R128.2 R155.9 R214.2 R292.3 R372.0 0 50 100 150 200 250 300 350 400 Gross fraud losses associated with counterfeit debit card fraud decreased by 32.2% from R96.3m in to R65.3m in. Counterfeit debit card fraud accounted for 19.1% of total gross fraud loss on debit cards. Most of these losses (63.0%) occurred inside South Africa. As with credit cards, the remaining 37.0% occurred outside South Africa where Indonesia featured prominently during. The highest gross fraud losses relating to counterfeit debit card fraud relate to cash withdrawals at ATMs, purchases at department stores, grocery stores, supermarkets, liquor stores and service stations. Counterfeit card fraud is accountable for the second largest portion of the gross fraud losses for credit cards, and the third largest portion of the gross fraud losses for debit cards. Transactions are increasing in countries outside South Africa where criminals are utilising this method to gain value from fraudulently obtained card information. PAGE: 31 // 42 PAGE: 32 // 42
Description of Fraud Types Counterfeit card fraud The skimming of cards via Point of Sale (POS) devices, ATM mounted devices and handheld devices to obtain card information remains a prevalent modus operandi. POS skimming devices retrieved ( to ) Card skimming via Point of Sale (POS) devices The first POS skimming devices were retrieved in South Africa in. Criminals steal legitimate POS devices from merchants and then illegally convert them into skimming devices. In some instances, devices are swopped between different merchants to make it seem as if all devices are accounted for. A total of 40 POS skimming devices were recovered by the South African Police and bank investigators in. 49 0 10 20 30 40 50 30 30 40 Card skimming with ATM mounted devices In, 36 ATM mounted skimming devices were recovered by the banking industry and law enforcement officials. ATM Mounted Skimming Devices Retrieved (2010 to ) 2010 36 15 0 10 20 30 40 50 60 70 36 43 44 53 59 71 Provincial distribution of POS Skimming Devices Retrieved in Gauteng Free State Western Cape KwaZulu-Natal 27 1 10 2 ATM mounted skimming devices were retrieved in Gauteng (14) and Free State (22). During these devices were retrieved in Gauteng (27), Western Cape (10), KwaZulu-Natal (2) and Free State (1). Provincial distribution of ATM Mounted Skimming Devices Retrieved in Gauteng Free State 14 22 PAGE: 33 // 42 PAGE: 34 // 42
Description of Fraud Types Counterfeit card fraud Card skimming with handheld devices In, 16 handheld skimming devices were recovered by the banking industry and law enforcement officials. Provincial distribution of handheld skimming devices retrieved in Handheld Skimming Devices Retrieved (2010 to ) 2010 190 Gauteng Free State Mpumalanga KwaZulu-Natal 7 2 1 6 194 237 151 89 37 31 16 0 50 100 150 200 250 ATM mounted skimming devices were retrieved in Gauteng (7), KwaZulu- Natal (6), Free State (2) and Mpumalanga (1) PAGE: 35 // 42 PAGE: 36 // 42
Description of Fraud Types Account takeover card fraud Definition Account takeover fraud takes place when an existing account is taken over by someone posing as the genuine account holder, who then uses the account for their own benefit. The common denominator for both Account Takeover fraud and False Application fraud is the fraudsters access to the personal information of their victims. This is done by obtaining personal or client-specific information, pretending to be the client and then applying for a replacement card which is then, once received, used fraudulently. Account takeover card fraud Trend Credit card gross fraud losses associated with account takeover fraud decreased 17.3% from R3.1.0m in to R2.5m in. Account takeover fraud accounted for 0.6% of the overall credit card fraud losses. Debit card gross fraud losses associated with account takeover fraud decreased 66.1% from R2.6m in to R869 349 in. Account takeover fraud accounted for 0.3% of the overall debit card fraud losses. Account takeover credit card fraud (2010 to ) 2010 R0.3 R0.9 R1.5 R2.4 R0.8 R1.8 R3.1 R2.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Account takeover debit card fraud (2010 to ) 2010 R0.0 R0.0 R0.1 R0.1 R0.2 R1.6 R2.6 R0.9 0.0 0.5 1.0 0.5 2.0 2.5 3.0 PAGE: 37 // 42 PAGE: 38 // 42
Description of Fraud Types Card not present card fraud (CNP) Definition CNP fraud is a fraudulent transaction where neither the card nor the cardholder is present while transactions are being made. These transactions occur when retailers are unable to check the card or the identity of the cardholder and are conducted under the following circumstances: orders for goods placed telephonically, purchases conducted via the internet, purchases by mail order or fax. CNP fraud is generally carried out using fraudulently obtained card data and personal information and is sourced through various means such as discarded receipts, prior CNP purchases and phishing. Card not present card fraud (CNP) Trend Gross fraud losses for credit card CNP increased by 7.4% from R296.4m in to R318.4m in. The losses related to CNP fraud accounted for 72.9% of the total credit card gross fraud losses in. The losses related to CNP fraud have been steadily increasing since and are currently at their highest level. Most gross fraud losses are related to transactions outside of South Africa (62.8%), with the remaining 37.2% occurring at South African merchants. The highest gross fraud losses related to CNP credit card fraud are because of the purchase of airlines tickets, travel agencies, hotels, direct marketing, and specialty retail stores. Gross fraud loss associated with CNP fraud on debit cards increased by 60.7% from R61.0m in to R98.0m in and contributed to 28.6% of the total gross fraud losses on debit cards. Most of these transactions (69.4%) occurred at merchants outside of South Africa, with the remaining 30.6% occurring at South African merchants. The highest gross losses relating to debit card CNP fraud is linked to the purchase of airlines tickets, speciality retail stores, direct marketing, security brokers and business services. An increase in CNP fraud has been observed in EMV compliant countries like the United Kingdom, and South Africa has followed a similar pattern. Debit card CNP fraud is expected to further increase as more CNP transactions are permitted using debit cards. CNP debit card fraud exceeded counterfeit fraud losses in and is currently the second highest contributor to gross fraud losses. CNP credit card fraud (2010 to ) 2010 R81.1 0 50 100 150 200 250 300 350 PAGE: 39 // 42 PAGE: 40 // 42 CNP debit card fraud (2010 to ) 2010 R7.9 R28.9 R30.8 R47.9 R179.7 R211.8 R61.7 R61.0 R238.0 R240.6 R249.6 R78.9 R296.4 R318.4 0 20 40 60 80 100 Criminals source card data to perpetrate CNP fraud through various modus operandi such as phishing, vishing, malware and data breaches. R98.0
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