July 2014 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.

Highlights from Global Fraud Report 2014


With 1,367 confirmed data breaches in 2013 alone, the security of the financial services value chain is a topic of frequent discussion in the media as well as around the dinner table. Organized fraud rings are constantly coming up with creative new methods of stealing funds and identities, and consumers are increasingly losing confidence that there is anything that can be done to reverse this downward spiral. 

Aite Group published a report recently that surveyed 6,159 consumers across 20 countries worldwide. Highlights from the report are:-

  • Of all cardholders—debit, credit, and prepaid—27% have experienced card fraud in the past five years
  • Consumers in the UAE experience the highest rate of credit card fraud at 39%, followed by the United States at 36%
  • Consumers in China currently experience by far the highest debit card fraud rate at 30%, followed by India at 23%, and Mexico at 20%
  • The highest rate of fraud on prepaid cards is experienced by consumers in India at 18%, followed by China at 17% and Indonesia at 11%
  • After experiencing fraud, 63% of consumers use their card less, at least in some situations, than they used their card previously
  • In 2014, 14% of debit and credit card holders cite having experienced fraud multiple times during the past five years
  • Of cardholders who received replacement cards as a result of a data breach or fraudulent activity in the past year, 43% used the new card less than the original
  • Consumers who are dissatisfied with how they are treated by their financial institution after experiencing fraud sometimes change providers, resulting in a global attrition rate of 23%
  • 55% of respondents are "very concerned" about reclaiming their financial identity if they become a victim of identity theft; this represents a twofold increase in consumers with this level of concern from 2011
  • Eighteen percent of global consumers lack confidence that their financial institution can protect them against fraud
  • 49% of global consumers exhibit at least one risky behavior, which puts them at higher risk of financial fraud


Source: Aite

Nigerian Banks Lose Over U.S. $978 Million to Cybercrime


Nigerian banks lost a total of N159 billion (US$ 978 million) to electronic fraud between 2000 and the first quarter of 2013, Nigerian Inter-Bank Settlements Systems (NIBSS Plc) has said.

According to Nigeria Communication Week, NIBSS added that the successful switch from magnetic stripe for automated teller machine (ATM) cards in 2009 to a more secure chip and PIN cards led to a drastic reduction in e-fraud to the tune of N21.72 billion with a further decline to N14.96 billion in 2010.

Another publication reported that a fortnight ago, Adebayo Adelabu, deputy governor, financial systems stability, Central Bank of Nigeria, said 2.4 per cent of banking revenue was lost to fraud cases. While quoting from the 2013 Global Fraud Report, he revealed that Africa retained its position as the region with the largest fraud cases, while sub-Saharan Africa maintained the unenviable position of the region with the most prevalent fraud problems (77 per cent) among the regions surveyed.

Source: allAfrica

Reserve Bank of India moves to protect victims of online fraud


Victims of online bank fraud should henceforth be much better protected from financial disaster thanks to a new directive. Customers of such fraud will only be liable to the extent of Rs. 10,000--the bank has to make good the rest of the amount. While the banks aren't too keen on the change and most are yet to formally accept it, they don't seem to have a choice. The Reserve Bank of India has the last word on banking rules and the directive is part of the code prepared by its Banking Codes and Standard Board of India (BCSBI) unit, which seeks to ensure that customers do not get a raw deal.

The new code says that for any unauthorized internet banking transactions, the customer's liability is limited, irrespective of the funds moved out of the account. An unauthorized transaction is one that doesn't have the express and implied approval of the account holder.

Also, the code says that customers will not be liable for any loss due to unauthorized fund transfers taking before they receive the password for internet banking transactions.

If the customer says that the unauthorized transfer of funds has been on account of a security breach by the bank and this is established, there will be no loss of money. Further, the onus will be on the banks to establish that customers have compromised the secrecy of their password. RBI data shows that technology related bank frauds have fallen in volume but risen in value.

Source: Economic Times

Types of Fraud in Banking


Fraud is an escalating threat for banks. Technological advancements and changing customer preferences have opened up new avenues of banking for modern consumers. But these channels of convenience have also attracted massive threat from fraudsters.  For instance, 41% of customers globally who have been victims of financial cyber fraud have failed to get even a single cent back. Fraudsters have not only perpetrated direct channels but have also gained entry within the banking system as insiders.

The following infographic throws light on the different kinds of frauds prevalent in banks and how use of innovative real-time anti-fraud technology mitigates & prevents bank frauds from taking place.
Types of Fraud in Banking

Source: CustomerXPs

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