Fraud remains a big challenge for banks
Carlo S. Lorenciana (The Freeman) - January 13, 2018 - 12:00am

CEBU, Philippines — Fraudulent activities continue to affect the banking industry, said the Cebu Bankers Club, as bank clients are reminded to be cautious against being victimized by fraudsters.

CBC president Mario Fritz Palileo said fraud continues to be a pressing challenge in the industry.

"These frauds are committed either by hacking or phishing," the bank official told The FREEMAN.

Palileo's comment came following BDO Unibank's pronouncement it noted an "extraordinary rise" in the number of fraud cases during the last three months of 2017.

In a statement Thursday, the country’s largest lender said it would refund clients who were proven to have fallen victim to unauthorized withdrawals and purchases as it appealed for patience from those who reported fraudulent transactions.

Amid these reported fraud cases, Palileo urged bank clients to have their ATM cards converted to EMV technology to prevent from being hacked.

The FREEMAN tried to seek comment from a bank manager of BDO in Cebu City if they have clients who have suffered the same fate as that of a BDO client Michicko Marzo who reported unauthorized transactions in her account.

Marzo is a 35-year old teacher in Indonesia, who said that six transactions were made using her BDO account on Dec. 27, 2017, where her account was charged P19,813.42.

According to Marzo, it would be impossible for her to do the transactions as these were made in the United States.

BDO Cebu officials declined to issue a statement.

Palileo noted all banks have exerted effort to contact their existing cardholders to convert to EMV.

EMV is a global standard for chip-based credit and debit transactions and is deemed more secured than the magnetic stripe technology which had been used in most bank-issued cards in the country.

The chip-enabled cards also carry additional security layers and can carry a bigger amount of data than the magnetic stripe.

"I think there are still cardholders that have not converted," he said.

As for phishing, a fraudulent act of sending fake websites, the CBC official said banks have posted on their websites and ATMs appropriate notices to inform clients to be careful in transacting with ATMs and fake web pages.

"Clients have to be careful with opening emails and other links especially those that will request for personal information, passwords and user IDs," said Palileo, assistant vice president at Unionbank of the Philippines.

In a statement Thursday, BDO president and CEO Nestor Tan said fraud investigations take time.

"It is a laborious process of tracing individual transactions and validating any irregularities and indications that there could have been fraud. Some of these parties in this process have to go through millions of transactions for verification. This is why it can take time for us to provide resolution to a customer's case," said Tan.

Fraud investigation involves five parties: the customer, the bank, the third party payment system, the bank or third party payment processor of the merchant, and the merchant itself, BDO said.

The bank also noted it separates cases of fraud perpetrated by unscrupulous individuals or groups from what it deems as "familiar fraud."

"In our experience, about one-third of fraud cases are classified as 'legitimate fraud,' where the customer is truly a victim through no fault of their own because of crime syndicates. Customers are immediately compensated in such scenarios," Tan said.

"Unfortunately, some cases are classified as 'familiar fraud,' wherein friends or a family member uses a client's account without the client's knowledge," he said.

Tan reminded clients to never share their PIN with anybody else and to regularly change it for security purposes.

On its Facebook page, BDO said that in the last three months of 2017, it noted an "extraordinary rise in fraud attacks towards the entire industry with an increase in the number of claims for unauthorized transactions taking place in other countries."

Bank clients are reminded to keep their account information private, as well as to be mindful of people requesting for their personal account details through phone, SMS, email, or websites.

BDO warned clients against ATM skimming, phishing and social engineering and other scams.

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