On Wednesday StanChart admitted that a few of its customers had fallen victim to the increased card fraud over the holiday season.
But, it said that only a very small number of its customers were affected and that the situation was under control. Fraudsters were using a process called skimming for copying card data and using the data to withdraw funds.
Standard Chartered East Africa executive director Kariuki Ngari said that card skimming was an evil that banks and other issuers would have to cope with for some time. A few of their customers had suffered this misfortune over the past couple of months and it had increased during the festive season.
For the past few days the bank had been sending messages to its customers asking them to change their personal identification numbers (PINs) to prevent skimming. The bank also said that it was continually updating it security measures to protect customers.
The bank has also assured customers that it would refund the money withdrawn from any account without the customer’s approval within 24 hours if the claims were genuine.
Instances of bank frauds have increased over the past few years and according to the audit firm Deloitte, banks in East Africa must have lost KSh. 4.06 billion to various types of fraud in the 18-month period ended June 2012.
The banks have said that increase in the use of electronic transactions is not supported by suitable security technology.
Data from the Central Bank of Kenya reveals that the number of card transactions in the country has increased tenfold during these past seven years.
Deloitte has reported last year that only a few Kenyan financial firms follow the Payment Card Industry Security Standards (PCI DSS) which have been created to shield and protect customer payment data.
Further, some cards in circulation are easier to skim because they use outdated magnetic-strip technology to store customer data.
Moreover, some of the cards in circulation are easier to skim because of the outdated magnetic-strip technology to store customer data. The industry is trying to switch-over to chip technology, which is more difficult to crack.
The Kenya Bankers Association chief executive Habil Olaka said that it was harder to skim information from a chip card when compared with a magnetic stripe card where the technology was five times more expensive.
He also revealed the banking sector’s plans to launch an industry-wide project to migrate to chip-technology cards in the first quarter of 2013. Security experts are cautioning Kenyans to be more watchful during the festive season to ensure protection of their data.
Skimming machines are normally installed at ATMs, and therefore, card users are advised to avoid making transactions at isolated or suspicious looking machines.
Customers are also informed not to let the debit or credit card out of their sight when making payments at restaurants or supermarkets. Restaurants and petrol stations are quite notorious for card skimming and so you should ask the attendants to bring the payment system to you or follow the attendant.
The director of a cyber security firm, Serianu William Makatani said that it was also necessary to keep track of your transactions and check with the bank if you have any doubts.