Bank under fire over online fraud

Legal eagle now takes on Absa

AN ATTORNEY acting pro bono for 29 Absa clients who are victims of online banking fraud has taken his fight to the Financial Sector Conduct Authority after reaching a deadlock with the ombudsman for banking services over the handling of his cases by the bank and the ombudsman.

The FSCA (formerly the Financial Services Board) is a statutory regulator and since April 1 has been responsible for regulating banks’ market conduct.

Until now, the only entity dealing with complaints about the market conduct of the banks was the ombudsman, which was established by the banking industry to regulate itself.

Mark Heyink, who specialises in information security law, has asked the FSCA to investigate the conduct of Absa in its dealings with victims of online banking fraud and to investigate the ombudsman for its alleged failure to properly apply the law when dealing with these complainants.

Internet banking fraud is on the rise and complaints relating to internet banking were the biggest category of complaints to the ombudsman last year.

The ombudsman closed 1 377 such cases last year, 77% of which related to cellphone banking and phishing fraud. The ombudsman found in favour of the banks in 77% of cases and in favour of consumers in 23% of cases, according to the ombudsman’s latest annual report.

Heyink says Absa and the ombudsman were not dealing fairly with victims of internet banking fraud. He says consumers are at an enormous disadvantage in protecting their rights.

“The details of the frauds are peculiarly within the knowledge of Absa, which is reluctant and, at best, tardy, in providing information to clients. Absa also emphasises to clients that they must have been subjected to a phishing expedition to obtain their banking details and strongly implies that the client must have acted negligently even when there is no evidence of negligence on the part of the client,” says Heyink.

But Absa claims that when fraud takes place an investigation is always conducted and what is communicated to customers is based on its findings.

Heyink has tried in vain to persuade banking ombud Reana Steyn to allow for a review of the decisions taken by the ombudsman against some of his clients.

Steyn says only a determination by the ombudsman can be taken on review. —