Prepaid Credit Card Fraud
Prepaid Credit Card Fraud-davinciforensics

Credit card fraud throughout the world consists of three different types: debit, credit and prepaid and as of 2013, almost one third of South Africans have been a victim of some form of card fraud. What started out as ingenious ‘419 scams’, alluring unsuspecting individuals into investing, purchasing or believing in a non-existent offer or situation, has expanded in sophistication due to the abundance of internet cafes.

The increased use of the internet and smartphones for a variety of purchases has also introduced the coveted internet cafes. The cybercriminals are taking advantage of internet cafes by conveniently setting up ‘house’ at the cafés and, using software, locating and hacking into computers and smartphones via the IP address that they locate. According to ‘BalancingAct-Africa’, “419 e-mail scams are only the tip of the iceberg. Africa’s cyber-cafes are being used by organized criminal gangs to carry out credit card fraud. It’s hard to estimate the value of these fraudulent purchases but wherever we go, we hear reports of it. The evidence in this issue comes from one country – Ghana – where as one café operator told us it is “pervasive”. Russell Southwood looks at what the perpetrators are doing and how the mail order operations are being stung.”

In an effort to take advantage of what consumers assume is a more convenient way to have a credit card, prepaid cards have become incredibly popular. Although the fees are often a bit higher, the cards allow a consumer to have a credit card while not being required to maintain a standard checking account with a bank. The problem with the prepaid cards is that they don’t always carry the same type of ‘safety guarantees’ from the bank or institution that they were purchased from as well as the consumer consistently ‘reloads’ the cards with additional funds that are then available for the hackers to access. This allows scammers to take advantage of the credit card with little or no recourse from the consumer. According to a study conducted by ACI Worldwide and Aite Group, South Africa was seventh on the list of card frauds with UAE (44%), China (42%), India (41%), the US (41%), Mexico (33%), and Australia (31%).

Sharon Knowles, CEO of DaVinci Forensics says:

In a time where the internet is often the main source of communication for many people, including e-commerce purchases, DaVinci Forensics continues to work with companies, individuals and families in establishing best practices to avoid becoming a victim to prepaid credit card scams. Simple actions that are included in our advisory information include keeping your phone locked when not in use, checking the security status of all e-commerce sites that are visited, recommended security software for all laptops and tables, keeping all pin numbers and passwords in secure locations, and recognizing a scam offering via email or text.”

Prepaid credit cards are continuing to rise in popularity and with this will be an increase from those individuals that view the cards as an easy method to get money. Consistent consumer due diligence and increased awareness is a priority with the recommendation of educational avenues supplied by the companies that are offering the prepaid credit cards.

*** Sources***


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