The most common types of bank fraud

International law states that any illegal act involving deception to obtain money from a financial institution or a bank’s depositors is categorised as bank fraud. Like other fraud offences, bank fraud involves using a trick to obtain money illegally. Nowadays, fraudsters are continuously coming up with different ways to steal people’s hard-earned money.

The following looks at the most common trends used by fraudsters that banking customers must know:

An Account Takeover (ATO) – allows fraudsters to transfer money, make fraudulent payments or withdrawals. The techniques fraudsters use to launch an ATO attack are phishing attacks, where fraudsters obtain account credentials by sending a fake email or text messages to customers that directs them to a fake bank login page. It takes place when fraudsters hijack an online account, often using stolen credentials. Once access is achieved, the attacker changes the password to lock out the actual account owner.

Social engineering – used in combination with phishing activities, it includes a broad range of attacks used by fraudsters to obtain personal bank account information from their victims by appealing to their emotions and fears during interactions to provide information as account passwords and Personal Identity Numbers (PINs), which allow fraudsters to take over accounts. If there are no funds in the accounts, they can monitor accounts until there are funds to steal, for example salary deposits, because the account holder does not know the fraudsters have access to the account.

Call centre fraud – is a form of social engineering in which a fraudster contacts an organisation’s call centre pretending to be a legitimate customer. They may then trick the call centre representative into giving them access to an account or performing fraudulent or malicious actions within an account.

Credit card fraud – is a broad term that signifies fraud committed using any payment card. The most common type of card fraud is card-not-present (CNP) fraud by doing fraudulent online purchases. The fraudsters execute these tactics by stealing a physical card or finding a lost card or card information, note that they only need the information on the card and not the physical card itself, like a photo image of the card, and the card owner is usually unaware that the information was stolen.

Electronic funds transfer fraud (EFT) – in this scam, the scammer poses as a trusted individual, vendor, company or family member and requests an EFT transfer, often tricking the victim emotionally by claiming it is an emergency.

New account fraud – is one of the most common types of bank fraud. Also known as fake account fraud, this tactic describes the type of fraud that occurs when a fraudster opens an account to commit fraud, often utilising stolen identities.

Cybersecurity issues – fraudsters often target unprotected software and other cybersecurity weaknesses to gain access to data servers and steal customer information.

Credential stuffing – fraudsters influence sophisticated bots to test random credentials automatically. Also referred to as “brute force” attacks, they leverage lists purchased on the dark web, trying different combinations until they gain access to an account.

Protect your financial accounts

It is essential to stay vigilant when it comes to protecting your finances. Since senior citizens are the most targeted customers, family members must proactively remind them not to trust anyone asking for their personal banking details, such as their banking PINs.

Customers should monitor their banking accounts regularly to detect any cases of potential fraud. Sign up for real time notifications of activities on your account from your bank and never put your phone off when asked to do so by a caller. Customers must call the bank immediately if they notice something odd and shred anything with account numbers or personal financial information.

A few proactive habits can help safeguard our finances in fighting fraud, such as catching up with the latest technologies and related scams. Always stay on the alert.

  • Johnny Truter is Bank Windhoek’s forensics services manager.

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