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Stanchart recalls ATM cards

By - | Updated Fri, January 11th 2013 at 00:00 GMT +3

By Moses Michira

Standard Chartered Bank has recalled ATM cards held by some of its customers following recent incidents of fraud.

The hit on the bank saw several card holders lose money in an incident that is turning out to be much bigger than thought.

The latest move is seen as aimed at averting further losses.

Several customers talked to confirm that the bank planned to replace their cards within two weeks, following new security threats targeting users of its automated teller machines.

Late last year, some of the bank’s customers complained that their accounts had been withdrawn without authority, prompting the bank to refund the lost amount.

Under wraps

The bank has, however, declined to divulge information on the extent of the damage, perhaps out of fear of a reputational risk even though the identity theft has actually been industry-wide.

“I will get you a comprehensive answer from the Chief Executive as the questions raised cannot be handled by our office,” Emily Kaiga, the public relations manager at the bank told The Standard.

An employee at the bank revealed ‘thousands’ of its customers had been asked to surrender their cards for replacement because their personal info is feared to have been stolen.

“We have received thousands of complaints from different branch customers and the bank has sought to replace any cards that may have been compromised,” said the source. It was not possible to quantify the claims or amount lost from customer accounts, but the bank had promptly responded to any complaints and addressed the losses.

The fraudsters used the personal information obtained to access the customers bank accounts by replicating the details of a client on a new card, through a process known as skimming.

“I was advised to change my Personal Identification Number, but I know someone who was asked to surrender their ATM card for replacement,” says one of the bank’s customers.

There are fears that the bank’s system may have been tampered with by insiders considering that even clients without ATM cards had been affected, leaving the lender heavily exposed to losses through refunds of lost customer deposits.

One such customer had all the funds in excess of Sh200,000 in her savings account drained out in the last week of December, through a single transaction by an imposter even though she had never applied for an ATM card.

A senior manager in a different bank suspected that either Stanchart’s banking system had been compromised to enable fraudsters access client information even with an ATM card, or its staff were involved in the illegal transfer of funds.

“This kind of identity theft is only possible with the involvement of the staff or a major weakness on the bank’s system that fraudsters have capitalised on,” said the manager who sought anonymity.

While Stanchart may only be the latest, its experience is not isolated, as other banks have also fallen prey to the identity thieves in the past.

In the more recent incidents, skimmers have stolen identities for customers of KCB and Equity Bank.