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Anti-Fraud CommitteeFraud Awareness For Merchants

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Educate as to how certain fraud typologies can affect you, the merchant

To be more aware of fraud and fraud incidents in the workplace and business environment

To provide tips on how to prevent and/or reduce the risk of you and your business becoming a victim of fraud

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“ A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.”

(Source - Blackstone’s Legal Dictionary)

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A material false statement, knowledge that the

statement was false when uttered, reliance on the false

statement by the victim to act on it and damage as a result

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Fraud Internal and/or External

The Internal Elements of Fraud

What happens at your place of business

The External Elements of Fraud

Is your place of business a target for Organised Crime (fraud)

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Definition of Internal Fraud (Association

of Certified Fraud Examiners - ACFE)

Internal Fraud a.k.a. – occupational fraud can be defined as:

“the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the organization’s resources or assets.” Simply stated, this type of fraud occurs when an employee, manager, or executive commits fraud against his or her employer.

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Why Does Fraud Occur

The best and most widely accepted model for explaining why people commit fraud is the fraud triangle. This is a model developed by Dr. Donald Cressey, a criminologist whose research focused on embezzlers—people he called “trust violators.” 

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Fraud Offences Include Fraudulent Conversion Falsification of Account Obtaining by False Pretence Embezzlement Uttering Forged Documents Dishonoured Cheques

2012 2013 2014

FRAUD OFFENCES 2012 - 2014

Over 2,000

Under 2,000

219

44

122

12

307

33

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What is Fraud

You may not be able to prevent yourself from being a “Target” to fraud…

…but you do not have to be a “Victim”

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Risk of Fraud - Payment Channels

Credit Card

Managers Cheque

Online (wire transfers)

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Section 1

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What is Skimming

“The surreptitious act of copying the encoded card information off the magnetic strip of either a credit or debit card with the intent to create a cloned card to facilitate fraudulent transactions on the legitimate account”

(Source - BATT)

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At the Cashier

Hand held skimming device Cards are swiped unsuspecting of the customer

using skimming device

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Stolen Cards Cards are taken at the point of purchase Cards used without the consent of the

card/account holder (domestic situation)

Lost Cards Lost cards are used to assist with stolen card

typology

Report lost/stolen cards to your bankers immediately

Be aware of the bank’s hotline numbers and reporting options for your bankers

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Rogue Employee – using skimming device (reputational risk)

Bust Out Merchant Fraud – colluding with the fraudster in using stolen/fraudulent cards (prosecution) – gets a % of the settlement (operating a/c)

Proof in the receipt – as evidence of sale (proper storage)

Ecommerce merchants – Data security

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Be wary of suspicious card holder behaviour More than one card to effect one purchase Choosing goods randomly/ shopping in groups Purchasing multiple high ticket items Multiple foreign Cards in his/her possession

Compare the signature on the receipt, by holding on to the card, against the signature on the reverse of the card

Ensure the gender of the card corresponds to the customer

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Tips To Reduce risk (internal)

Monitor payment area/workstation for skimmers/lost cards

Educate/train your employees

Examine your terminals (portable)

Segregation of Duty (business cards/ reconcile account)

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Managers Cheques Call your bank to verify cheques drawn on your

bank Do not release goods/services before verifying

the authenticity of the cheque Exercise caution when dealing with ‘new clients’ Ask for your account relationship manager to

verify the cheque Look for the security features listed on the face of

the cheque – these features are listed next the padlock

Look for the bleed through feature on the MICR line

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New Facts About Cyber Threats

In 2008, a cyber attack effectively crippled the entire nation of Estonia for a few days.

In 2009, the US president called cyber threats one of the greatest challenges to his country’s economy and national security.

Q1 2013, McAfee detected 14 million new pieces of malware.

In 2013 there are 82,000 new malware variants discovered per day.

In 2015, a survey found that the greatest threat to businesses are cyber-related threats.

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Banking Related Wire fraud Threats

Phishing A fake email pretending to be from a bank or

other organization claiming to need your account details or other personal information

Malware (banking malware) Malicious Software (specifically designed for

financial transactions)

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Hard Copy Instructions via Letter Heads Sent to the bank via courier Subsequent calls to support instructions

Internet – Cyber Crime Sending instructions to your banker via email to

process wire Intercepting emails with payment arrangements

and redirecting wire to another account, at another bank, in another jurisdiction.

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Do not send private or financial information via an unsecure email address

Do not respond to unsolicited emails

Do not access any online facility via an email◦ “Don’t be the weak link…Don’t click on the hyperlink”

(Source - BATT Inter Bank Fraud Committee)

Reconcile your account/s on a regular basis.

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Basic Online Security Tips

Use (and protect) strong PINS and passwords (use phrases e.g “Lara is the best”; “election is tomorrow” etc.)

Keep computers updated (No Windows XP!) Do annual security awareness training (include

social engineering training) Get experts to install and maintain firewalls &

anti-malware Do online banking from secure computers only Be careful what you put online (website, social

media) Use email safely

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Questions