Sabric warns against scams

Wed, 08 Oct 2008

The SA Banking Risk Information Centre (Sabric) on Tuesday again warned companies and individuals to beware of ongoing fraudulent banking scams, such as the deposit and refund scam.

These scams succeeded because sensitive company information, including banking details, letterheads, and client details, fell into the hands of criminals, Sabric Commercial Crime Office head Susan Potgieter, said in a statement.

"The prevalence of the deposit and refund scams is of great concern to both the banking industry and law enforcement even though the banks do not suffer any direct monetary losses," she said.

While the modus operandi was not new, the perpetrators usually took advantage of the relationship a company had with its creditors, debtors, and even clients.

"They would create an impression that a company is dealing with a reputable stakeholder, through using its letterheads, logos or any other form of identity to defraud the business. Obviously there is compromise of this business' personal information for them to be able to use it."

Fraudsters communicated with victims, usually in an official letterhead from the said "debtor", stating that a deposit had mistakenly been paid into the respective client's account.

They then requested an immediate refund and provided the bank account details into which the refund should be made, usually asking for an electronic funds transfer.

Often a deposit had indeed been made, and it was assumed a genuine mistake had been made and a refund was appropriate.

"What the unwary businessman doesn't know is that often the deposit has been made with a fraudulent cheque and the scam is only discovered when the cheque bounces," Potgieter said.

The bulk of companies targeted tended to be small and medium enterprises, while private individuals were also targeted.

"The criminals do their homework and they carefully select their victims."

They went to great trouble to gain an understanding of their victim's profile.

They establish who the victim typically would do business with and fabricated their story around possible facts.

"The more familiar elements in the version that is presented to the unsuspecting victim, the more likely that the victim will fall for the scam," she said.

Companies needed to take measures to protect themselves from these scams.

"They need to introduce restrictions to their personal information and that of their partners and screen staff members that have access to business information."

It was also important for businesses falling victim to this type of scam to conduct full investigations to prevent any future internal collusion.

Preventative steps included always viewing any request for a refund with suspicion.

When faced with a request for a refund, always ask the bank if the deposited funds were in cash or cheque and wait for the cheque clearing process before considering a refund.

Check whether the telephone, fax, and banking details provided in the correspondence requesting a refund correspond with those on file.