Recent developments have brought to the forefront a series of card fraud schemes that have left unsuspecting customers grappling with unauthorized money transfers and the subsequent evasion of necessary charges. This disconcerting issue has raised significant concerns among financial institutions and regulatory bodies, triggering thorough investigations by entities such as the Bank of Ghana (BoG) and card providers.
At the heart of these fraudulent activities lies a network of cliques, adept at manipulating unsuspecting individuals into granting access to their cards. Once this access is obtained, the perpetrators exploit the cards to carry out unscrupulous money transfers, cleverly evading the charges typically associated with such transactions. Multiple banks have reported instances of customers falling victim to these cunning practices in recent times, casting a spotlight on the vulnerabilities within the system.
Speaking to the B&FT, an insider shed light on the matter, stating, “As you may recall, we previously discussed the emergence of card usage issues leading to unauthorized debits, prompting an uproar from affected individuals… Some individuals may have become victims of cliques operating discreetly under the guise of simple requests for card access. These cards are then exploited for money transfers, enabling the perpetrators to evade the necessary charges. Several banks have fallen prey to this scheme in recent times.”
One website that has come under scrutiny is an unauthorized money transfer organization (MTO) operating outside the purview of the Bank of Ghana’s regulations. Investigations have revealed that customers unwittingly utilized their cards on this platform, oblivious to the illicit nature of their transactions. These transactions were initially misclassified as the purchase of large digital goods, masking their true intent as cross-border money transfers, thereby violating card-issuer rules.
Under normal circumstances, such cross-border transactions would incur Optional Issuer Fees (OIF), commonly referred to as currency conversion fees. However, it has come to light that these fees were not applied in real-time, resulting in the omission of appropriate charges from the transactions. Once the true nature of these transactions was unearthed, corrective measures were implemented to rectify the irregularities.
In response to the fraudulent scheme, one affected financial institution promptly reported the incident to both the Bank of Ghana and the relevant card-issuer. Consequently, authorities have launched comprehensive investigations into the matter, aiming to ascertain the full extent of the fraud and hold those accountable for their actions.
Furthermore, given the involvement of the country’s hard-earned foreign currency in these unauthorized transfers, which can be considered economic crimes, the Economic and Organized Crime Office (EOCO) has been duly alerted in accordance with the Economic and Organized Crime Act of 2012, Act 804.
At the time of filing this report, responses from the Bank of Ghana, the Economic and Organized Crime Office, and other pertinent stakeholders were not yet available, indicating the gravity of the ongoing investigations and the concerted effort to address this issue promptly.
In light of these unsettling events, the focus on consumer protection and responsible online practices has assumed paramount importance. Experts strongly urge individuals to exercise utmost caution and take necessary precautions to safeguard their cards and personal finances in these ever-evolving circumstances.
To shield themselves from falling prey to fraudulent schemes, consumers are advised against sharing their card details with anyone and encouraged to verify the authenticity of requests for card access. Additionally, adopting responsible online behavior, such as utilizing secure payment platforms and conducting thorough background checks on websites and organizations before engaging in financial transactions, becomes imperative.
These revelations come at a time when digital fraud cases are on the rise, mirroring the exponential growth of electronic payments. In a parallel development, the financial sector witnessed a substantial surge in fraud cases in 2021, resulting in a staggering loss of GH¢61 million, compared to GH
¢25 million in the previous year, representing a disconcerting year-on-year increase of 144 percent. Various forms of fraud, including ATM card/point of sale (POS) fraud, impersonation, lending and credit fraud, forgery and document manipulation, cash suppression, and E-money fraud, contributed to this alarming figure.
Notably, ATM card/POS-related fraud accounted for the highest losses, totaling GH¢22.99 million, with universal banks bearing the brunt of the impact. The recorded rate for ATM/POS fraud stood at a concerning 99.98 percent for universal banks, with the Savings and Loans sector accounting for a mere 0.02 percent.
Negligence on the part of some customers and weaknesses in the systems of certain financial institutions have been identified as significant contributing factors to this worrisome trend. These findings underscore the urgent need for heightened customer vigilance and stronger security measures within financial institutions to effectively combat these fraudulent activities and mitigate the financial losses associated with them.
