Complaints about ATM-related fraud now account for most of the complaints to the Ombudsman for Banking Services, Clive Pillay, the ombudsman, says in his annual report for last year.
In 2009, his office received 282 ATM-related complaints – nine percent of the total number of complaints. Last year, his office received 937 such complaints – 25 percent of the total, Pillay says.
In the past, most complaints to the ombudsman have been about mortgage bonds. But last year, for the first time since the banking ombudsman’s office was established in 1997, ATM-related complaints accounted for most of the complaints to Pillay’s office.
“This [change] may be due to the effect of the National Credit Act in regulating mortgages and credit extension by the banks,” he says.
Pillay says that criminals use various techniques to con ATM users. Fraudsters come across as being friendly and pretend to help clients who are having problems with an ATM, he says.
You should not allow strangers to stand near you while you are using an ATM, nor should you accept offers to “help”, he says.
“If an ATM appears to be faulty or does not seem to be working properly, do not use it. It is generally safe to assume that anyone approaching you at an ATM or asking you to do anything while at an ATM is actually after your card and the money,” he says.
The total number of complaint cases opened by the ombudsman’s office increased substantially, from 3 366 in 2009 to 4 241 last year, Pillay says.
The number of inquiries received by the banking ombud’s office also increased, from 12 562 in 2009 to 38 141 last year.
Pillay says the increase in complaints and inquiries can be attributed to the recession, and most of the complaints involved an element of financial distress.
The ombudsman’s office finalised most of the complaints it received within six months, Pillay says, whereas in 2009 most cases were finalised within two months.
The increase in the time that it took his office to finalise cases was due mainly to the overall rise in the number of cases and the very complex and time-consuming nature of the cases that needed further investigation, he says.
“For example, internet banking fraud-related complaints increased significantly in 2010 and are notoriously time-consuming to investigate and assess. One case can involve hundreds of separate fraudulent accounts opened with different banks,” Pillay says.
ATM SAFETY TIPS
Protect your money and your bank card by taking the following precautions when you use an ATM:
* Before you approach an ATM, scan the area for suspicious-looking people.
* If you think the ATM is faulty, cancel the transaction immediately.
* Always shield the keypad with your hand when entering your PIN.
* Reduce your daily withdrawal limit to a reasonable amount – this can limit your exposure to fraud.
* Never write down your PIN or disclose it to anyone.
* Never accept unsolicited help at an ATM. If you are having a problem at an ATM, remove your card from the machine and go to the bank for help, or perform your transaction over the counter.
* Never lend your ATM card to anyone.
* Avoid using an ATM that has been damaged or tampered with, or that has a cord or foreign object hanging from it.
LESSONS FROM OTHERS’ MISTAKES
The following cases, taken from the Ombudsman for Banking Services’s latest annual report, have important lessons for you. (The ombudsman’s report does not disclose the names of the banks or the complainants.)
You must monitor your accounts for fraud
If fraudulent activity is taking place on your bank account but you continue to perform transactions and fail to notice that something is amiss, this may be regarded as negligence, and your bank will not accept liability for your losses.
The onus is on you to monitor your bank account, check your bank statements and to be aware of all the transactions that are taking place on your accounts.
Unauthorised ATM withdrawals to the total of R7 450 were made from Mrs X’s current account. It emerged later that Mrs X’s bank card had been cloned.
The fraudulent withdrawals took place between April 24 and May 24 last year. Mrs X performed several transactions during the same period.
On April 28, a shortage of funds in her current account led Mrs X to transfer money from her access bond account to her current account. By this time, two fraudulent withdrawals totalling R1 850 had already taken place. The bank felt that any reasonable person should have noticed this or realised that money was being withdrawn from the account.
Clive Pillay, the Ombudsman for Banking Services, agreed that it was unfair to hold the bank liable for the full extent of Mrs X’s loss.
The bank offered to reimburse Mrs X by R1 850 – the amount that was taken before she could reasonably have become aware of the fraudulent activity.
It’s not that easy to reverse an incorrect transfer
When you make an electronic funds transfer (EFT), ensure that you use the correct bank account details for the recipient, because the banks cannot reverse incorrect transfers automatically.
The banks can reverse the mistaken transfer only with the account holder’s permission and only if he or she has sufficient funds in his or her account for the entire amount to be paid back.
Mr Y made an EFT into an incorrect account, which belonged to a former employee and was held at another bank.
Mr Y asked his bank to reverse the transaction, but the request was made over a weekend.
The banks cannot reverse transactions over weekends, because they require consent, either in writing or verbally, from the recipient account holder.
Also, banks can reverse only the full amount transferred. They cannot do partial reversals or reverse a portion of the funds where the balance has already been withdrawn from the recipient’s account.
By Monday morning, the bank was unable to process Mr Y’s reversal request, because there were insufficient funds in the recipient’s account and the account holder could not be reached to obtain his permission for the reversal.
Insurance premiums on home loan account left open
Once you have paid off your home loan, make sure you give your bank clear instructions on what it must do.
If your home loan account is not closed, the bank will continue to debit you for premiums on the homeowner’s insurance.
Mr J paid off his home loan in 1998. He did not ask his bank to close the account.
In 2005, Mr J became aware that he owed the bank R52 000 on the mortgage bond for homeowner’s insurance. Mr J refused to pay, and the bank obtained a judgment against him.
Pillay says that any reasonable account holder would not simply pay the outstanding balance on his or her mortgage bond and forget about the account. A reasonable person would try to confirm that the account had been closed and that no further premiums would be debited.
“Over the years, Mr J would have received regular bond account statements and annual insurance premium letters. No reasonable person would ignore these letters, assume it was a mistake and accept that the bond was settled,” he says.
Pillay says even if no statements or letters were received from either the bank or the insurer, a reasonable person would find out if his or her property was insured, and so Mr J was negligent to some degree.
However, Pillay also found that the bank was to some extent responsible. It had been negligent in not obtaining clear instructions from Mr J and in not contacting him sooner.
Pillay suggested that the bank and Mr J settle 50 percent of the account each, and both parties accepted this.
CONTACT
The Ombudsman for Banking Services is Clive Pillay
Sharecall: 0860 800 900
Telephone: 011 712 1800
Fax: 011 483 3212