The 2024 edition of the Global Money Week is running under the theme “Protect Your Money Secure your future” and it’s focusing mainly on the need to create awareness to all stakeholders about the need to protect ourselves from online fraud.
Online fraud is when a financial transaction is completed without the knowledge or authority of the account holder.
Almost anyone can open a bank cccount and complete a transaction in the comfort of their own homes.
By the same token, perpetrators of cybercrimes have also taken advantage of this development because they now commit such crimes in similar comfort.
Ninety nine percent of transactions in Zimbabwe are now online making the country an attractive market to cyber criminals and the fact that we are a multi-currency economy dominated by the US dollar further exposes the country to fraudsters from beyond our borders. As we commemorate this year’s Global Money Week let’s take a look at the most common way criminals to swindle people online.
Skimming
Skimming involves stealing information off a debit card during a legitimate transaction.
This type of scheme usually occurs in a business where the owner of the card is taken out of sight or simply distracted while the transaction is being processed.
The fraudster will swipe the card through an electronic device known as a “wedge” or skimming device, which records all information contained on the magnetic strip.
The harvested information will then be used to create another debit card that will be used by the fraudsters.
Of recent debit cards belonging to corporates have been prime target because of the huge bank balances they have. If a fraudster is able to clone the cebit card of the entities main account he will be in for the rich pickings by virtue of huge account balances held in such accounts.
To counter this, banks are encouraging companies to open a separate bank account and dedicate to it the functions of the debit card such that wen the entity wants to purchase something they will transfer the amount to use in the debit card account from the main account thus reducing the risk of money lost in case the debit card is cloned.
Identity theft
In the Gold Mafia documentary there was identity theft were bank accounts were created using names of unsuspecting citizens. A homeless person is approached and convinced to give his National Identity details for a small couple of dollars. Those details are used to open a legitimate bank account, this is done to cover tracks in case authorities decide to investigate the owner of the account because it will only be tracked and lead to a destitute. In Zimbabwe a similar tactic is used by black market forex dealers to evade the monthly limits on transactions put in place by RBZ to control the velocity of money. Forex dealers would use the identity of his brother/sister or a relative and open several bank accounts with those names so that when one account reaches the monthly limit they switch to another account thus bypassing monthly limits put in place by RBZ.
Salamani technique
A cybercriminal may run a programme known as the “Salami Technique” as an approach to steal money in small increments. The programme makes micro-changes over an extended period, so that the changes are not easily noticeable. An example of this type of fraud is a programme that deducts a few dollars per month from the accounts of many clients without being detected. Zimbabwe provides perfect conditions for fraudsters to utilise the Salamani Technique because of 2% money transfer tax charged on every online transaction and victims usually don’t verify if the cost of the transaction was actually 2% plus bank charges. Also due to inflation transactions are in millions and the criminal may just take a couple of thousand dollars and the unsuspecting client will not notice and just assume they are bank charges.
Phishing
In an attempt to maximize the benefits from technology utilisation most people end up being victims of technology. Cyber fraudsters design web pages to look like legitimate sites like an e-commerce web page where victims enter personal information such as usernames, passwords and credit card details. There are several reports of people who realise funds have been transferred to another account when in fact all they were trying to do was to purchase airtime using the banks. Usually if this kind of fraud is reported the accounts that would have been used to transfer money would be suspended for further investigation but no arrests will be made because of the complexity of the case.
Investment fraud
Pump-and-dump is a scheme that attempts to boost the price of a stock through recommendations based on false, misleading, or greatly exaggerated statements. Promoters of the scheme will then begin to coordinate rumors, misinformation, or hype on an investment in order to artificially increase interest in the security, driving up its price. Once the price of the stock has been increased sufficiently by unsuspecting marks, the promoters then sell the stock at high prices but the shares eventually collapses.
Ponzi scheme
A Ponzi scheme is an investment scam that pays early investors with money taken from later investors to create an illusion of big profits. It relies on word-of-mouth, as new investors hear about the big returns earned by early investors. Inevitably, the scheme collapses when the flow of new money slows, making it impossible to keep up the payments. Eventually, no new investors can be recruited and the scheme collapses. Typical example of a Ponzi scheme in Zimbabwe is the E-Creator were a strategy of mass marketing was implemented to lure new investors but as investors slow down the scheme had no money to pay investors.
*Clive Munyaradzi Newengo is practicing management accounting at Alpha Media Holdings. Here he writes in his own personal capacity.