BDO refunds victims of unauthorized withdrawals
BDO Unibank, Inc. has settled the account balances of depositors who have been affected by unauthorized withdrawals and purchases, its president said.
BDO Unibank President and Chief Executive Officer Nestor V. Tan told reporters late Friday that BDO “already paid in advance” depositors who lost money from spurious withdrawals from their accounts, even as the internal probe into these complaints has yet to be completed.
“For accounts affected recently, we have been crediting back the amounts found to be unauthorized transactions,” a Jan. 17 statement from the bank’s Facebook page also read.
Although refusing to provide details, Mr. Tan said initial results of the investigations showed that the unauthorized cash withdrawals and purchases charged against the money of several depositors “came through authorized channels” of global payments platforms Visa and Mastercard.
In a Jan. 9 statement, BDO said there has been an “increased number of clients” who experienced suspicious bank transactions done without their knowledge. This mirrored an “extraordinary rise” in fraud attempts across the banking industry during the fourth quarter of 2017, the bank said.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said returning the amounts in question to depositors is an option which the listed
lender can take as they look into these cases.
The central bank official said BDO’s case falls under the liability shift framework, which requires banks to shoulder losses from incidents of card skimming if the victim has not been issued the more secure microchip-based card.
“There is a process before a bank can restitute the depositor that lost the money [where] they will have an investigation. But the challenge is the investigation is taking long, and that’s where the depositors would be complaining already,” Ms. Fonacier, who heads the BSP’s bank supervision unit, said separately when sought for comment.
“There is that ( provision) in the regulation where it should be that within 10 days, the bank should already be able to restitute upon report.”
Announced in December 2016, the liability shift framework transfers the burden on banks whenever a depositor falls victim to card fraud as he still uses the old magnetic strip- based cards rather than the Europay Mastercard Visa ( EMV) standard now prescribed by the BSP.
Under Circular 936, complaints due to counterfeit cards need to be processed and resolved within 10 days rather than the usual 45-day standard. The same issuance requires banks to set up provisions for fraud losses, which they will use to settle amounts illegally taken from depositors.
The central bank gave all lenders until June 30, 2018 to migrate all cards, cash machines and point-of-sale terminals with microchip readers, which are deemed more secure.
Ms. Fonacier said preliminary results of BSP’s own investigation showed most of the bank cards were compromised when they were used abroad. There are roughly a hundred complaints received by the BSP, with the aggregate amount likely at P1 million “or smaller,” she added.
“You can’t blame them because even if they (BDO) are really taking steps to ensure cards won’t get skimmed, but if these cards are used as jurisdiction which is not EMV- compliant…,” the central bank official said.
In June 2017, the Sy-led bank confirmed at least 95 reports of card fraud after at least seven automated teller machines in the country were tapped into using skimming devices that stole client data and passwords.
The central bank did not impose a penalty on BDO over these incidents as they were “handled properly,” and with the bank found compliant with existing regulations.