Wednesday, December 26, 2012

Bank reassures customers after spate of ATM card fraud in city

Ex-bankers suspected masterminds of banking fraud
Standard Chartered East Africa executive director Kariuki Ngari speaking on December 26, 2012 in Moi Avenue, Nairobi, on increased cases of card fraud. The banking sector was planning to launch an industry-wide project to migrate to chip technology cards in the first quarter of 2013. Photo/DIANA NGILA
Standard Chartered East Africa executive director Kariuki Ngari speaking on December 26, 2012 in Moi Avenue, Nairobi, on increased cases of card fraud. The banking sector was planning to launch an industry-wide project to migrate to chip technology cards in the first quarter of 2013. Photo/DIANA NGILA
By MUTHOKI MUMO [email protected]

Standard Chartered Bank on Wednesday admitted that a number of its customers had fallen prey to increased card fraud over the holiday season. 

The bank, however, said only “a very small number” of customers were affected and that the situation in now under control. Fraudsters are copying card data, a process known as skimming, then using that data to withdraw funds.

“Card skimming is a vice that banks and other issuers have to contend with from time to time. Some of our customers have had this misfortune over the past couple of months and it has become more pronounced during the festive season,” said Standard Chartered East Africa executive director Kariuki Ngari, in an e-mail to the Nation.

Security measures

The bank has for the past few days been sending messages to its customers urging them to change their personal identification numbers (PINs) to prevent skimming.

Further, the bank says that it is continually updating security measures in order to protect its customers.

The bank says that it will refund any money withdrawn from an account without the customer’s consent within 24 hours provided that the claims are legitimate.

Cases of banking fraud have been on the rise over the past few years. According to audit firm Deloitte, banks in East Africa lost Sh4.06 billion to various types of fraud in the 18 months period that ended in June 2012.

Industry players say increased use of electronic modes of transaction has thus far been unmatched by appropriate security technology. 

The latest data from the Central Bank of Kenya shows that the number of card transactions in the country grew tenfold in the past seven years.

At the same time, Deloitte last year reported that very few Kenyan financial service firms adhere to the Payment Card Industry Data Security Standards (PCI DSS) that have been created to secure and protect customer payment data.

Further, some cards in circulation are easier to skim because they use outdated magnetic strip technology to store customer data. The industry is currently trying to migrate to chip technology, which is tougher to crack.

“It is harder to skim information from a chip card when compared with a magnetic stripe card. However, the technology is up to five times more expensive,” Kenya Bankers Association chief executive Habil Olaka said.

He revealed that the banking sector was planning to launch an industry-wide project to migrate to chip technology cards in the first quarter of 2013.

Security experts are urging Kenyans to be vigilant during the festive season so as to protect their data.

Skimming machines are usually installed at ATMs. Card users should avoid making transactions via isolated or suspicious looking machines.

Further, when making payments in restaurants or supermarkets, one should not let the debit or credit card out of their sight.

“Restaurants and petrol stations are notorious for card skimming. Ask them to bring the payment system to you or follow the attendant.

“You also need to keep track of your transactions. Call the bank and confirm if you have any doubts,” director of cyber security firm Serianu William Makatiani said.

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