December 2015 Issue

Our 'Newsletter on Financial Fraud' is your monthly insight into the various new fraud types and methods used by fraudsters globally in the banking space. 

In this issue, we bring to light the effect of banking fraud creeping in and making banks lose millions to this plaguing menace.

Bank Fraud Doubles in One Year

In May 2015, the Reserve Bank of India (RBI) set up a Central Fraud Registry to check growing bank fraud. After this, the Prime Minister’s Office called a meeting to review the fraud-detection system, a clear indication that the government was worried.

The media reported the move, but largely laid the blame on the rise in bank non-performing assets (NPA), loans in danger of default.

Now, data obtained by, a Bangalore-based startup helping citizens file queries under the Right-to-Information (RTI) Act, via the RTI reveals that NPAs are not entirely to blame.

NPAs did rise 23% between 2013-14 and 2014-15, threatening India’s banking system, but it is also true that in the past year, there has been a 100% increase in bank fraud (as per RBI data). Indeed, this is why the RBI set up the fraud registry and why the PMO reviewed the fraud-detection system.

Over the year, the amount involved in bank fraud rose from Rs 10,170 crore ($1.6 billion) in the fiscal year 2013-14 to Rs 19,361 crore ($3 billion) in 2014-15, i.e. nearly 100%.

The fraud ranged from cheque alteration to fake loans, debit/credit card fraud to cyber fraud.

While banks in Maharashtra saw a 150% increase in fraud, from Rs 2,445 crore in 2013-14 ($376 million) to Rs 6,115 crore in 2014-15 ($940 million), banks in West Bengal notched a six-fold increase in fraud, from Rs 773 crore ($118 million) to Rs 5,930 crore ($912 million).

The RBI has been able to close only 30% of these cases every year. Public-sector banks appear to have borne the brunt of the fraud-spike. But contrary to popular belief, public-sector banks have actually handled fraud better than private banks. Despite a market share of 30%, private banks collectively account for around 40% of losses from bank fraud. India has 20 private banks, 26 public-sector banks and 30 foreign banks.

NPAs, the fig leaf behind which fraud hides, soared 23% from Rs 2,51,060 crore ($38 billion) in March 2014 to Rs 3,09,409 crore ($48 billion) in March 2015.

Source: Business Standard

Cardless bank fraud soars as cloning drops

Online and telephone banking fraud has soared to its highest level in 10 years and cost the industry millions in losses. This is reflected in South African Banking Risk Information Centre (Sabric) data, released on Wednesday, as authorities are adopting a tougher stance on this type of crime.

The activity is known as card-not-present fraud, when credit or debit card details are used to do transactions online or over the phone. In the nine months to September, credit card fraud rose 12.6% to R189.2m and debit card fraud surged 15.8% to R118.9m.

Sabric CEO Kalyani Pillay said: "Over the last two to three years, we have seen a shift to card-not-present fraud." In previous years, lost and stolen cards accounted for the bulk of the cases.

The rising use of online shopping and other forms of web transacting have been cited for the steep surge in this type of fraud.

Card-not-present fraud has also contributed to an 8.3% overall increase to R257.1m in debit card fraud, which includes false applications, counterfeit cards, as well as lost and stolen cards.

"It used to be lower," said Ms Pillay. "Banks now allow debit cards to be used for online transactions. They offered this solution to make banking more accessible."

Fraudsters tend to buy airline tickets compromised with credit and debit cards. They then sell them to third parties at a discount.

Losses from counterfeit cards, where information is stolen and used to clone cards, have plunged.

Losses from fake credit cards fell 45.6% to R48.5m and those from debit cards dropped 29.5% to R81m.

Banks are now getting rid of cards that do not have a chip and pin feature, which has been credited for the drop in counterfeit cards.

Source: Business Day

Almost two-thirds of Australians prefer NFC to cash

MasterCard has labelled cash as unnecessary wallet real estate following the release of a survey that showed contactless near-field communication (NFC) payments are preferred over cash for nearly two-thirds of respondents.

The survey of just over 1,000 Australians aged between 18 and 65 was conducted by Galaxy research for the credit card giant, and found that respondents favoured the speed of a contactless transaction, and the ability to be reimbursed for unauthorised transactions in the event of card theft.

"I'll take a card any day of the week -- it is safer than cash," said MasterCard Australia country manager Andrew Cartwright. "If my wallet is stolen, the cash is as good as gone."

MasterCard said that it has 625,000 terminals capable of contactless payments, and card data compiled along with Visa found that contactless fraud made up less than 2 percent of all card fraud. For the year to July 2014, MasterCard said it had experienced 148 percent growth in contactless payments.

A parliamentary committee recommended in September that banks should ensure contactless payments on debit and credit cards include a feature that requires the consent of customers before it is activated.

Source: ZDNet

5 Min Guide to Data Breaches

So, is your data really protected??

Percentage of Data breaches is enormous & this fraud increases exponentially in developed countries. As there are so many types of data breaches and it is difficult to monitor all breaches in real time because of which consumers feel insecure at the time of financial transaction. We use technology to prevent information from fraud but in such cases technology is incapable in making our payment safer. Data breaches strike the people of all ages either intentionally or un-intentionally.

According to Federal Trade Commission Consumer Sentinel Network Data Book, globally total data breaches were 1541 in 2014 & at the same time, the total data records lost or stolen were 1023,108,267 that emerged as the largest form of fraud worldwide.

This infographic below reflects this global fraud scenario.   


Source: CustomerXPs

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