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IOL News
07-08-2025
- Business
- IOL News
Protect yourself: Ombud warns of 73% rise in virtual banking fraud in South Africa
The National Financial Ombud (NFO) has warned that while virtual banking cards offer enhanced convenience and security, they are increasingly being exploited by fraudsters. Image: File The National Financial Ombud (NFO) has warned that while virtual banking cards offer enhanced convenience and security, they are increasingly being exploited by fraudsters. According to the NFO, digital banking fraud complaints have surged by a staggering 73% year-on-year, rising from 1,436 cases between January and May 2024 to 2,483 during the same period in 2025. The increase is being driven by fraudsters who exploit phishing scams, and other deceptive tactics to gain access to consumers' digital banking profiles and create virtual cards to drain their accounts. The watchdog also added that "in contrast, ATM card complaints rose from 237 to 332, but remained lower in number than virtual or digital fraud cases. Between January 2024 and May 2025, digital fraud complaints exceeded ATM fraud complaints by 3,350 cases, marking a dramatic shift in card fraud from plastic to virtual". Nerosha Maseti, the Lead Ombud for Banking and Credit at the NFO, warned that "while virtual cards offer enhanced convenience and security, they are not immune to fraud". Maseti added that the NFO's "investigations reveal that virtual cards are typically compromised through unauthorised access to a customer's banking app". 'Fraudsters are able to create virtual cards and then use the virtual card credentials to perform transactions once gaining access to a customer's digital banking profile,". Maseti said. "This happens when bank customers have compromised their confidential access credentials, shared One Time Pins (OTPs) or accepted authentication messages for the creation ofvirtual cards". She added that this was happening despite awareness campaigns by banks. "The majority of complainants to our office indicated that they were unaware of the existence or use of virtual cards,' she said. Maseti pointed to a recent case where a consumer lost R500,000 after falling victim to a vishing scam, in which fraudsters posing as bank officials convinced her to share her online banking credentials. The scammers accessed her profile, created multiple virtual cards, and authorised purchases using in-app approvals on her mobile device. The bank rejected her refund request, arguing that the transactions were authenticated through her app using valid credentials. The NFO upheld the bank's stance, finding no evidence of system failure or negligence.
IOL News
24-06-2025
- Business
- IOL News
Major banks under scrutiny as NFO reports increased consumer complaints and significant recovery outcomes
One year after the NFO was established, it says thousands of consumers have been helped. Image: Supplied The National Financial Ombud Scheme (NFO) has released worrying statistics indicating that South Africa's largest banks are at the centre of a growing wave of consumer complaints, with over 5,900 cases registered in 2024 alone. This alarming trend underscores the pressing need for better banking practices and reinforces the role of the NFO as a crucial mediator between consumers and financial institutions. Established just a year ago, the NFO has already made significant strides in protecting consumer rights, successfully recovering approximately R328.5 million from various financial entities across the nation. This independent body acts as a watchdog for fair treatment, helping clients reclaim their funds when disputes with banks, insurers, and credit providers arise. The National Financial Ombud Scheme is investigates the operation of South African banking institutions Image: Supplied Breaking down the data, the NFO highlighted that the banking division alone opened a total of 15,412 cases, successfully closing 11,535 complaints, an achievement that reflects a sharper turnaround in response time compared to the previous year, according to Nerosha Maseti, lead ombud for the Banking Division. In terms of recovery, the breakdown shows considerable disparities among banks: Capitec Bank: 1,203 complaints (20% of banking cases), with 22% ruled in favour of consumers. 1,203 complaints (20% of banking cases), with 22% ruled in favour of consumers. First National Bank (FNB): 1,017 complaints (17%), with 16% consumer wins. 1,017 complaints (17%), with 16% consumer wins. Standard Bank: 998 complaints (17%), 19% ruled for consumers. 998 complaints (17%), 19% ruled for consumers. Nedbank: 881 complaints (15%), with 22% consumer wins. 881 complaints (15%), with 22% consumer wins. Absa: 812 complaints (14%), 13% ruled for consumers. The leading cause of these grievances remains fraud, accounting for 30% of all complaints. Following closely behind were issues related to maladministration and the struggles of debt-stressed consumers, signalling areas where banks must critically reassess their service delivery and client engagement strategies. Maseti emphasised that the NFO's commitment to fair outcomes has not wavered, despite significant internal changes. The organisation's efficient resolution processes aim to ensure that consumers feel empowered and supported in their financial dealings. As South African consumers grapple with an array of financial challenges, these findings urge a dialogue about the need for greater transparency and accountability in the banking sector, pivotal to restoring trust in South Africa's financial ecosystem. DAILY NEWS
