EFT, card fraud drive N$50.7 million in losses

Namibians lost N$50.7 million to fraudsters in 2024, a N$4.7 million increase from N$46 million in 2023.

The majority was lost through electronic fund transfer (EFT) fraud, which made up N$29 million.

According to the annual report from the Bank of Namibia (BoN), these attacks often take the form of fraudulent emails, text messages, phone calls or websites that appear legitimate.

“[The losses were] largely due to phishing attacks, where individuals are deceived into divulging sensitive information such as usernames and passwords by fraudsters posing as legitimate entities,” reads the report.

A total of N$19 million in card fraud was committed, up from N$18 million in 2023.

According to the BoN, this increase was primarily due to card-not-present fraud on e-commerce platforms.

These incidents occur when a customer uses their card at an online merchant where transactions are not authenticated with a one-time password (OTP), meaning no OTP confirmation is required from the customer.

Additionally electronic money (e-money), which includes mobile wallets, prepaid cards and digital payment platforms, saw a decrease in fraud cases.

“E-money fraud decreased to N$2.7 million (down from N$11 million in 2023),” reads the report.

The BoN says the decrease in e-money fraud can be attributed to enhanced controls for e-money wallets and heightened consumer awareness regarding phone call scams.

“This is given the increased regulatory focus after the previous year’s high fraud values,” says the report, which is themed ‘The Impact of Artificial Intelligence on the Economy’. Director general of the National Planning Commission Kaire Mbuende says as banks and institutions move to incorporate artificial intelligence (AI) into their system, caution must be taken.

“The risks to cybersecurity are escalating, with AI tools capable of enabling sophisticated cyberattacks,” says Mbuende.

He says there are also concerns around data privacy, surveillance, bias, fairness and accountability in relation to AI which need to be addressed.

“These challenges demand that we act with foresight and urgency as policymakers. Beyond this, AI must be harnessed responsibly, governed ethically and deployed inclusively,” says Mbuende. The BoN says that, to address the increasing prevalence of fraud, the industry has enhanced monitoring for fraudulent transactions and the blocking of e-commerce sites identified as sources of fraudulent activity. The implementation of policy around operational and cybersecurity standards required the banking industry to implement controls, such as two-factor authentication, i.e. the provision of two forms of verification before a payment is executed.

Additionally, there have been improvements of the controls that protect financial data from being compromised, as the industry is continuously implementing standards such as the Payment Card Industry Data Security Standard (PCI DSS).

“PCI DSS is a set of security guidelines created to ensure that all stakeholders handling card information follow strict security protocols to protect cardholder data. It helps prevent data breaches, fraud and theft of sensitive payment information,” says the BoN.

According to the Payment Association of Namibia (PAN), refund and deposit scams have been prevalent in the country. The refund scam functions by using altered or fraudulent receipts, deposit slips or internet payment confirmations to trick people into believing that a payment has been made into their account and cleared, says the PAN. The fraudster then asks the person to refund them the money apparently paid into their account incorrectly.

A deposit scam uses fake payment confirmations to trick people into believing they have received money.

“Typically, you will be asked to hand over goods before you realise you have been scammed,” says the PAN.

During the launch of the report, the BoN declared a N$720 million dividend, which central bank governor Johannes !Gawaxab says is the highest dividend since the BoN’s inception.

“We have declared a record historic dividend to the government of the Republic of Namibia of N$720 million, compared to N$511 million last year,” !Gawaxab says.

Additionally, the bank’s investments grew by N$10 billion compared to last year.

This is due to higher revenue from diamond sales and the Southern African Customs Union, and the global rise in interest rates.