Banking customers are urged to remain extra vigilant during these trying times
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South Africa is in the middle of one of the most trying times in the country’s history. Unemployment was on the rise which will only worsen in the aftermath of the current situation. In addition, tensions are boiling over turning into violent acts and destruction which are currently disrupting society. This includes bank ATMs and branches.
“During these trying times, we are urging all banking clients to keep calm and to be aware that the violence will be causing some disruption to normal branch services. In addition to all the other challenges facing consumers, fraudsters will be more motivated than ever to take advantage of the current crises that is gripping the country. We need to be extra vigilant during these times,” urges Reana Steyn, the Ombudsman for Banking Services (OBS).
Many banks have announced that there will be disruptions to their branch services. Some branches, particularly in malls which are being targeted by looters and rioters, have been closed to the public until further notice. Others have even been destroyed along with associated infrastructure.
This will force a lot of people to shift to online transactions. This will also see a shift in fraud with scammers taking advantage of the desperation currently gripping the country.
“The move to online transactions and mobile banking will prove to be challenging for some people as it may be the first time that they ever transact with their bank in this manner,” says Steyn.
She adds that fraud continues to pose a real threat to the financial wellbeing of our society. Banking customers continue to be tricked into divulging personal information such internet banking credentials as well as card information. This enables fraudsters to conduct fraudulent transactions where cards do not have to be present.
Steyn explained her office witnesses many complaints where bank customers fall victim to scams where fraudsters convince customers into making payments into a nominated bank account under the guise of selling them goods such as motor vehicles. Tender scams are also becoming increasingly popular.
In one of the matters dealt with by her office, Steyn explained that the complainant paid over R96 000 to a fraudster who had convinced him that they supplied water pumps. Unfortunately, by the time the matter was reported to the bank by the customer (and a block was placed on the fraudster’ account), the fraudsters had already depleted the funds.
Steyn confirmed an investigation conducted by her office found no evidence of wrongdoing by the bank which would justify the bank being held liable for the complainant’s loss.
Steyn urged bank customers to ensure they contact their banks or the beneficiary bank to verify the authenticity of the recipient of the funds prior to making payment. In the majority of the cases dealt with by the OBS, it was established, only after the funds had been depleted, that the accounts were not in the names of the businesses they purported to be in. Steyn particularly warned those making payments to recipients with no proven record to be vigilant.
“The level of desperation that fraudsters are showing is alarming. They are motivated and are acting brazenly. Never divulge any personal information to a person over the phone, even if they assure you that they are from your bank. Report any suspicious activity to your banks fraud hotline immediately,” says Steyn.
Tips From The OBS:
- Be aware: always remember that legitimate businesses will never ask you for your personal, sensitive, or confidential banking information. Anyone who does this over the phone is probably trying to scam you;
- Always be sceptical: even if your Caller ID gives the name of a bank, or some other company or organisation, it could be a trick;
- don’t click on links or icons in unsolicited emails: don’t reply to these emails. Delete them immediately;
- check that you are on the secure banking website before entering any personal information;
- check your bank statements regularly and report suspicious entries immediately to your bank;
- never accept assistance from a stranger at an ATM.
- if your card is jammed at the ATM do not leave the ATM but immediately contact your bank to report the incident;
OBS Mid-Year Stats
During 2021, the OBS has (to date) opened over 4 000 formal cases. Current account complaints are presently the category with the highest number of complaints. Fraud and fees and charges are the two main sub-categories that were complained about.
Covid-19-induced job losses and reduced working hours continue to be an unwelcome reality for most South Africans.
Due to these changes, the needs of some bank customers’ have evolved prompting them to re-evaluate their financial products (such as their bank accounts) in search for more affordable offerings in line with their financial needs.
Some of the complaints received by the OBS are from people advising that they had moved/switched their banking accounts to other institutions and were surprised when, a few months down the line, they received calls from debt collectors for payment of outstanding balances on the overdrawn accounts when they never had an overdraft. “Whether you change your bank account due to the fees being charged or you are unhappy with the service offered by your current bank, there is a process that needs to be followed,” Steyn explained.
The bank-customer relationship is based on a mandate, and it is the bank’s duty to act on the lawful instruction provided by the customer. Therefore, if the account holder instructs the bank to close the account, the bank must act on that instruction provided the account in question is not in debit/owing or credit. Should this be the case, the account holder will be required to settle the outstanding balance prior to the account being closed.
“However, what we see as the OBS is that bank customers forget to inform their debtors that they have closed or switched accounts to other institutions resulting in their debtors continuing to pass debit orders to the closed account. This results in the debit orders being returned unpaid, attracting returned unpaid debit order fees. This in turn results in the account being overdrawn”, says Steyn.
She reminds bank customers it remained their duty to ensure their financial affairs are in-order by continuously updating their information with their debtors every time they change accounts, especially where debit orders are debited from the account.
The Code of Banking Practice, and now the Conduct Standard for Banks, also places a duty on the banks to Treat Customers Fairly. In terms of the Code of Banking Practice, banks are required to treat an account as dormant if it is not in use for a period ranging from three to six months. In such a situation, banks are required to try and contact the account holder. If no response is received, the account should be closed. The Conduct Standard for Banks requires that the bank informs account holders of the effects and the implications of having a dormant account instead of closing it.
“Unfortunately, what we have noticed as the OBS is that, some banks have acted contrary to the Payment Association of South Africa (PASA) rules which states: the User (including a bank) must remove the payment instruction if a debit order returns unpaid on two consecutive occasions. In such situations, the OBS has been successfully able to recommend to the banks to write off the returned unpaid debit order fees more than the above PASA Rules provision,” says Steyn.
Regrettably, Steyn advised that a similar recommendation cannot be made to users who are not banks but reminded customers to lodge complaints with relevant bodies with jurisdiction.
Bond cancellation disputes
The OBS has, over the years, also received numerous complaints from people who had settled paying their bond accounts but later discovered the bond was not closed and that there is an outstanding balance owing on the account.
“The OBS would like to remind consumers that, while the bond may be settled, until it is formally cancelled, it will remain active. Insurance policies that were debited on the bond will continue to be debited together with other fees and charges relating to the administration of keeping the bond account active for as long as the bond is not cancelled. This is the reason for the majority of the complaints received relating to fees and charges on bond accounts,” says Steyn.
For a bond to be cancelled, bank customers are advised to provide the bank with a written instruction to cancel the bond. With regards to the insurance policies debited on the account, bank customers are also advised to cancel the policies with their insurers or to request that the premiums be deducted from another account instead of the bond account.
Calm heads will prevail
Steyn points out that while the country is trying to resolve the current situation that it finds itself in, this is a time for calm heads and vigilance.
“We are urging all banking customers to remain calm and to be vigilant about what is going on around them. If the current events lead to your business closing down, temporary or permanently, it could mean that you can no longer afford your loan, mortgage or overdraft. The best thing to do is to contact your bank at the earliest opportunity. Not sharing the information or making arrangements will only lead to the accounts attracting interest and possibly legal fees. Second, to prevent fraud, remember that your bank will never ask you to verify any information of a personal nature over the phone. Take a note of who is calling you and then report the incident immediately to your banks fraud hotline. Protecting yourself during this time is key,” says Steyn.
The Ombudsman for Banking Services staff are committed to supporting the community and fellow citizens in these trying times. They already mobilised to lend a hand with the cleaning-up operations and will continue to lend assistance in whatever way possible.