Establishments should be very careful against fraudulent activity that could see them lose thousands of rands. Picture: Steve Buissinne/Pixabay
Establishments should be very careful against fraudulent activity that could see them lose thousands of rands. Picture: Steve Buissinne/Pixabay

Consumer Watch: Be on the alert for holiday booking credit card fraud

By Georgina Crouth Time of article published Oct 28, 2019

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With the holidays almost upon us, holiday scams are top of mind. But while consumers often fall prey to fake booking scams, spare a thought for businesses because they, too, are affected.

For Astor House in Durban North, two group bookings of eight and six guests over the Durban July weekend dented their credit rating and their pocket.

Owner Ramona Reddy said both bookings were made through - a well-established international travel fare aggregator. They were paid for by credit card. All communication was done via email and telephone before check-in.

The guests provided copies of their driving licences, ID books and phone numbers. But on Sunday, July 7, panic set in when one of them couldn’t present the card used for the booking, which is a bank requirement.

Sensing trouble, Reddy contacted Nedbank’s card division for advice.

“The card division had advised the card numbers I had provided looked like foreign cards and they have no communication with international banks. They later confirmed these cards were used fraudulently and we should have them apprehended. I enquired as to what the procedure for this was and was asked to call back.”

Frantic, she tried contacting the bank several times that day and emailed the details to their card division. “We were advised that the fraud department is not open on weekends.”

The following day, the guests checked out - and she couldn’t stop them. The police were no help either.

On September 2, Nedbank sent through chargebacks, dishonour fees and commission fees on their business account which caused it to be overdrawn. Nedbank said the transactions had been completed manually, at their own risk.

After trying to lodge an insurance claim for a R40000 loss, Reddy was told she could claim for R5000 per event, with a R1000 excess. The insurer paid out R8000.

“We have three separate events as three transactions were made with our terminal. However, because the same card was used twice, the insurer is not interested,” she said.

“Nedbank refuses to acknowledge a small business that has banked with them for 11 years and assist us in this matter, yet we had provided them with ample documentation to do so. Our guest house has suffered financial damage, including to our credit rating with the bank.”

She said banks should not permit such transactions if security measures are not met to safeguard a small business owner and wondered whether this was “another way of them just collecting their fees on these transactions, as well as investigation commissions which would be more lucrative for them.”

Her “guests” posted pictures of their lovely “complimentary weekend” on Facebook, presumably using their real identities.

Astor House has opened a fraud case with the police.

A Nedbank spokesperson said: “The booking was made with a foreign bank card, but the guest presented local identification, which is a red flag. The guest was also not able to present the physical card which was used to make the online booking when requested to do so, which is also a red flag.

“Nedbank strongly advises merchants against accepting any bookings processed via websites that are not 3D Secure. 3D Secure is designed as an additional security layer for online credit and debit card transactions. With this, a number of additional steps are added to the credit card booking process with the aim of authenticating the cardholder performing the transaction. All transactions processed via websites that are not 3D Secure pose a risk to the merchant should a dispute arise. Nedbank also provides a 24-hour fraud helpline to assist both our merchants and cardholders.”

Banking ombudsman Reana Steyn encouraged Reddy to lodge a complaint with her office. Steyn said: “The relationship between the complainant and the bank will be governed by the merchant agreement, which we would have to consider.”

But since Reddy had contacted the bank prior to the “guests” checking out, and the fraud department was unavailable, this aspect warrants investigation.

“Essentially, we would need to be afforded an opportunity to fully investigate this matter before any findings can be made on the merits. It is suggested that the complainant lodge a complaint with our office and allow us the opportunity to investigate her dispute further.” said: “We’d like to highlight that if any of our partners or customers ever notice anything suspicious about a booking, they should reach out to our customer service team immediately so that we can investigate and support further.”

Reddy is not happy with either response.

“The banks process these transactions, collect their fees to process as well as terminal fees including commission to process the chargeback. There is only monetary gain for these banks to still allow payments to go through without the proper security checks. If Mastercard does not permit manual transactions, why do they still go through?”

She said she was disheartened by the lack of responsibility from both and Nedbank. “Surely, if this is an ongoing issue, then measures need to be put in place? There is no loss for these organisations as they still receive commission and fees and charges for their services from these bookings. Whereas the bed-and-breakfast or hotel loses out.”

Reddy said she was thankful that nothing worse had happened to her or her family during that period as they live on the property.

* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.

** Receive IOL's top stories via Whatsapp by sending your name to 0745573535

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