Financial Crime World

Fraudulent Transactions Plague South African Banks, Says Ombudsman

The Office of the Banking Services Ombudsman (OBS) has reported a record number of complaints in 2021, with internet banking fraud topping the list.

Record Number of Complaints

The OBS received and investigated over 10,330 complaints, a 7% increase from the previous year. This surge in fraudulent transactions has led to significant financial losses for consumers, with many reporting losses and inconveniences that could have been avoided had they been more cautious.

Internet Banking Fraud on the Rise

Internet banking fraud accounted for 19% of all cases opened in 2021, a worrying statistic that marks a 6% increase from 2020. This highlights the need for increased vigilance in the financial sector, particularly when it comes to internet banking fraud.

Bank Liability and Compensation

In 73% of the matters resolved by the OBS in 2021, the findings were in favour of the banks. However:

  • In 15.9% of cases, the banks were held fully liable
  • In 4.5%, they were partially liable
  • The OBS concluded that there was some wrongdoing on the part of the banks in 20.4% of cases

The ombudsman’s office awarded and offered over R19 million to consumers who had legitimate claims, with many receiving compensation for losses suffered due to fraudulent transactions. However, 6.6% of complainants received no award, although they were provided with information on why this was the case.

In a summary of formal cases opened against South Africa’s “big five” banks:

  • FNB saw a significant drop in complaints
  • Standard Bank and Capitec experienced increases
  • ABSA and Nedbank also reported increases, although TymeBank saw an alarming 870.8% increase in complaints due to a low base in the previous year

Tips for Protecting Yourself from Fraudulent Transactions

The OBS is urging consumers to:

  • Be more vigilant and protect their confidential banking information
  • Never accept help from strangers at ATMs
  • Regularly check their account statements
  • Engage with their banks promptly if they notice any suspicious activity

As the OBS continues to investigate and resolve complaints, consumers can expect more guidance on how to protect themselves from fraudulent transactions.