Banks alert business and consumers

The South African Banking Risk Information Centre (SABRIC), on behalf of the banking industry, is warning businesses and individuals to beware of the deposit and refund scam that continues to cost South Africans thousands.

The deposit and refund scam has evolved over the years and fraudsters have now changed their tactics. Previously they posed as a fake ‘client' making a payment into the victim's bank account by using a fraudulent or fake cheque. The ‘client' then calls complaining that the payment was higher than the price of the item being sold or quoted, and demands an immediate refund. The victim would refund the ‘client' and only recognise the scam once the fake cheque was returned by the bank - unpaid.

The banking industry has discovered that the fraudsters are now using invoices issued to the victim, or they obtain details of the exact amounts owed by the victim to their creditors, with full contact details. The fraudsters use the information to dupe the victim into paying the amount due to a creditor into a fraudulent account. There is no request for a refund; payment is merely directed into a fraudulent account.

This is how the scam works

• The victim, usually a business, is contacted by fraudsters pretending to be employed by one if its creditors.
• The fraudsters know exactly which amounts are due by the victim to the creditors (as well as the contact persons on both sides).
• The fraudsters inform the victim verbally and in writing (using the creditor's letterhead, which they fax) that their banking details have changed and the amount must be credited to a newly appointed account number and institution. Obviously, the account number they provide has been fraudulently opened.
• The victim, therefore deposits the money into the newly appointed account without confirming with the creditors (because they are under the impression that they are in fact dealing with their creditors).
• Only once the victims are contacted by their genuine creditors for outstanding accounts do they realise that they have been caught in a scam

“There have been reports of incidents where stickers with new payment details have been stuck onto original invoices directing payment to fraudulent accounts,” says Susan Potgieter, SABRIC Head of Commercial Crime. “Consumers are warned not to accept these changes at face value, but to verify the information using their known contact persons. Treat such notification with suspicion and only use the information once you are 100% sure that the facts are correct.

“We've also recently received several reports of fraudsters posing as SARS employees and requesting refunds from consumers. SARS is currently refunding individuals who are entitled to tax refunds and thus the storyline is quite believable.”

Consumers are warned not to respond to any requests for repayment of incorrect payments from SARS without making proper enquiries from SARS themselves.

The public is advised to take the following precautionary measures to protect themselves against this fraud:

• Treat every request for a payment seriously and always verify the facts. It may help to always keep track of your creditors and document their legitimate contact details.
• When you receive information from your ‘creditors' via phone or fax informing you of changes in their account details, verify the facts by calling your creditors on an alternative number to the one given to you on the fax or when you were called.
• It is always a safe option to make payments to your creditors electronically, either via internet banking or electronic transfers that you arrange when you get into the credit agreement

Important tips for businesses

• Treat any request for refund with utmost suspicion and do a thorough investigation prior to considering a refund
• Treat any unsolicited deposits into your bank account with utmost suspicion and as a matter that deserves thorough investigation prior to considering a refund
• Train your finance managers and staff to consider any pressure for a refund as a good reason to not act immediately. Pressure to pay is a common sign of a refund scam
• First, check with your bank if the deposit that was made was a legitimate deposit and whether it was made with a cheque or cash. If it was a cheque deposit, wait until the cheque has been cleared before considering making any refund
• An insistence on a refund by way of internet transfer is usually an indication of a scam
• Validate that the details that are provided to you by the person requesting a refund are indeed those of the company he purports to represent
• Conduct accredited vetting processes of your employees who are dealing with financial and other sensitive information of your business.