Jamaica’s Banking Sector Hit with Fraudulent Schemes Worth Nearly $1 Billion
A surge of fraudulent schemes has hit Jamaica’s banking institutions, leaving customers reeling and potentially exposing the sector to losses amounting to nearly $1 billion in recent months.
The Scams
Fraudulent schemes targeting weaknesses in offline point-of-sale (POS) transactions, credit card refunds, and customer personal information have forced banks and financial institutions to implement new rules for related transactions.
Offline POS Transactions
One type of fraudulent scheme involves cloned cards and collusion with unscrupulous merchants. This typically involves using a cloned bank card to process a transaction on POS devices taken offline, usually for millions of dollars. The fraudsters then approach merchants offering to pay them a small percentage for use of their POS terminals.
- Once the device is taken offline, the fraudster processes the transaction and transfers the cash out of the customer’s account to multiple accounts linked to money mules.
- In one instance, fraudsters siphoned off J$52 million and US$322,000 from several accounts at a targeted financial institution.
Credit Card Refund Scheme
Another prevalent scheme is the credit card refund scam. This allows merchants to process refunds without having an original transaction, resulting in losses for the merchant. The cashback is then sent directly to a cloned bank card, which can be used to shop online or monetized in other ways.
- Financial institutions have implemented measures such as verified and delayed refunds to spot and cancel suspicious transactions.
- However, insiders say the scheme is widespread and has been used to fleece millions of dollars from merchants across various industries.
Response from Authorities
The Financial Intelligence Agency (FIA) has seen an unprecedented rise in fraud-related cases being referred for investigation. The agency’s head noted that some financial institutions are failing to submit high-quality reports of suspicious transactions, making it difficult to complete investigations on time.
- The Jamaica Bankers Association has warned merchants against colluding with fraudsters and urged them to follow established policies and procedures for processing specific transactions.
- The FIA is committed to bringing perpetrators to justice and prioritizing investigations to ensure that no stone is left unturned in combating fraud.
What You Can Do
As the authorities continue to investigate these cases, they urge customers to be vigilant and report any suspicious activity to their financial institutions. By working together, we can combat this growing threat and protect our financial systems from fraudulent activities.