Thursday, December 8, 2022

Bank fraud on rise, especially debit cards

Mexican banks registered almost 2.9 million cases of suspected fraud totaling 7.3 billion pesos, or US $480 million, during 2014.

A study by the consumer protection agency Condusef indicates that although the number of cases decreased by 2% last year, the financial impact increased by 3% from 7.14 billion pesos.

Credit card fraud accounted for 48% of the total, or 3.56 billion pesos. Savings deposits were next at 2.15 billion pesos, debit card fraud totaled 1.6 billion, 49 million pesos were from from certificates of deposit and prepaid card fraud amounted to 10 million pesos.

The banks with the highest number of registered fraud claims were Banamex (800,046), Bancomer (713,486), Santander (534,245), Banorte (261,862), HSBC (172,081), Banco Azteca (137,463), Scotiabank (99,450), and Inbursa (52,345). Banco Azteca saw a 130% increase in cases, up from 59,657 claims in 2013.

Between debit and credit cards alone, fraudulent charges grew to 5.16 billion pesos. Banks returned 3 billion pesos of that amount to cardholders, leaving a loss of 2 billion pesos that cardholders had to absorb.

Credit cards are the bank product most susceptible to fraud. Even so, Condusef head Mario di Costanzo worries about the rapid rise in debit card fraud, which has seen increases between 6% and 17% in the past few years.

Between 2012 and 2014, traceable claims for debit card fraud have grown from 785,091 to 971,268. By contrast, credit card claims decreased by 8% during the same period, down from 1.94 million to 1.78 million. Di Costanzo says the principal reason for the increase in debit card fraud is the rapid increase in the use of alternatives to cash.

He pointed out that not all of the responsibility for fraud falls on financial institutions. Cardholders need to be careful when using their cards in stores, at ATMs or when shopping online.

Card transactions at point-of-sale (POS) terminals are the riskiest. Last year, about 1.85 million fraud cases transpired at POS terminals, 1.2 million with credit cards and 650,000 more with debit cards. In addition, the growth in digital banking and commerce via the Internet, telephone and mobile banking have contributed greatly to the increase in fraud.

The Bank of Mexico says there are 128.85 million debit cards and 27.2 million credit cards issued in Mexico.

Source: Milenio (sp)

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