Your rights if kidnappers force you to give up your banking details

With banks tightening security measures to protect customers’ bank accounts from scammers, criminals increasingly turn to kidnapping people and then force them to transfer their money to them. Is it your right to expect the bank to refund you?

The banking division of the National Financial Ombud Scheme (NFO) says according to media reports there has been a significant increase in kidnappings in South Africa where criminal syndicates target South African entrepreneurs.

It has received some complaints relating to kidnappings where consumers want their money back after disclosing their confidential banking information under duress.

Nerosha Maseti, Lead Ombudsman for the banking division, says the division held a panel discussion around this new trend at its recent annual banking workshop.

“The discussion focused on incidents such as kidnappings and how digitisation facilitated easier access to banking consumers’ funds for criminals.

“The discussion also explored possible and available measures to help banking consumers safeguard their banking details and mitigate financial losses.”

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Bank security so good criminals have to make other plans

She says a possible reason for fraudsters turning to this new modus operandi is that banks have implemented various layers of security on their online platforms.

These measures are making it increasingly challenging for them to easily obtain confidential banking information from banking customers.

“When investigating kidnapping-related complaints reported to the NFO, we found that criminals force banking customers to disclose their online banking and banking app passwords under the threat of violence (duress) after kidnapping and detaining them.

“Once the criminals gain access to these platforms, they can alter account limits and make unauthorised transfers leading to significant financial losses in addition to the trauma of the kidnapping itself.”

Maseti points out that, when investigating banking complaints, it is important to first understand the purpose of the NFO.

The primary purpose and mandate of the NFO is to investigate and resolve consumer complaints against financial service providers in the banking, insurance (life and non-life) and credit space.

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NFO investigations into who was negligent

“When a customer submits a complaint regarding losses suffered due to the forced disclosure of confidential banking information after a kidnapping, the NFO’s banking division investigates the case thoroughly and the resolution is based on the merits of each individual matter.

“In investigating these complaints, the investigation will typically involve ascertaining whether there was wrongdoing or negligence on the part of the bank that caused the customer’s losses or contributed to them.”

She says if an investigation finds that the bank could have prevented or mitigated the customer’s losses but failed to do so, the NFO’s banking division has the power to recommend to the bank involved to refund the portion of the customer’s losses that could have been prevented but was not due to the bank’s negligence.

“As an independent organisation, the NFO is unwavering in its commitment to resolving disputes impartially and at no charge to the complainant. The NFO ensures that banks treat their customers fairly and in compliance with their own policies, procedures and all applicable laws, regulations and codes of conduct.”

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Case Study: consumer loses R103 000 in kidnap

In a recent NFO investigation, a consumer was kidnapped and forced to disclose his online banking credentials, resulting in unauthorised transactions totalling R103 092.

The bank’s fraud monitoring system flagged the activity on the complainant’s accounts and contacted the complainant, who confirmed the validity of the payments (under duress).

After he was released, the consumer reported the incident to the bank and wanted a full refund. The bank rejected the claim, citing that the consumer disclosed his confidential banking information.

“The NFO’s investigation considered the contract between the parties. The contractual terms and conditions of the bank’s online banking platform state that if a third party gains access to a customer’s online banking profile, the customer is held liable for all transactions occurring before the bank is notified of unauthorised and/or fraudulent transactions,” Maseti says.

“As part of the investigation, we also considered the actions taken by the bank once the incident was reported. Unfortunately, all the funds transferred out of the consumer’s accounts had already been utilised before the bank was made aware of the incident.”

Therefore, she says, the bank was not found negligent in mitigating the complainant’s loss.

“Given the merits of this matter, there were no legal grounds to hold the bank liable for the consumer’s loss. The consumer was essentially a victim of a crime and the bank was not involved.”

However, the bank agreed to refund a portion of the loss as a gesture of goodwill, based on its commercial discretion, Maseti says.

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Banking customers usually held liable when giving up banking details

“When banking customers compromise their confidential banking details, they are usually held liable. However, liability shifts to the bank once the compromise is reported.

Upon notification, the bank must mitigate any losses.” 

However, each case must be assessed on its own merits, she says.

“The specific facts of the matter guide the findings of the NFO. Even if liability is attributed to the consumer, the bank may still consider the customer’s personal circumstances and vulnerability and in some cases, offer a partial refund as a gesture of goodwill.”

Maseti points out that there is a lot to consider regarding this issue. Banks have the difficult task of confirming the alleged criminal claims and that the confidential information was, in fact, disclosed under duress.

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How to avoid being a kidnap target

She says with this type of crime increasing, consumers can take a few measures to protect themselves and mitigate significant damages:

• Be careful when posting online. Avoid posting sensitive financial information or sudden changes on social media. It is extremely important to be vigilant about what information you share on social media and the perceptions you create about yourself, your family and your friends. Avoid posting about sudden influxes of funds, as this can make you a target for criminals.
• Do not draw unwanted attention to yourself. Wearing expensive jewellery, carrying high-end branded items, or carrying other valuables in public may attract unwanted attention.
• Vary your daily routine as often as possible. Diversify your daily activities to reduce predictability. Criminals may monitor predictable routines well before the actual crime is perpetrated in order to ensure that they are vulnerable to criminal targeting.
• Consult your bank. Discuss the measures your bank may offer to help mitigate potential losses if you become a victim of any type of banking fraud. Many banks provide options to tailor your online banking and app experience, including limiting your exposure and risk.
• Consider investment options. Use accounts with restricted access to limit potential losses. In some instances, investing in a notice account may reduce access to your funds, thereby limiting your overall loss.
• Consider insurance. Check if your bank offers duress insurance or trauma counselling services. These may help in tough situations.

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Be vigilant and report the crime

“Finally, consumers are urged to remain vigilant and take proactive protective measures. If you fall victim to these crimes, report the incident to the SAPS and the relevant law enforcement agencies to investigate and prosecute the perpetrators of the crime,” Maseti says.

If you have been a victim of a crime of this nature and have a complaint against a bank, contact the NFO for free assistance. For more details, please visit www.nfosa.co.za or call 0860-800-900.