Experienced consumer journalist Wendy Knowler has highlighted a problem in how banks deal with refunds in cases where customers were kidnapped and forced to make certain payments.
Contactless payments and anti-fraud measures, such as biometric verification, have made it more difficult for criminals to transact on their victims’ bank accounts without the victim’s presence.
That has contributed to a surge in cases where banked customers are kidnapped and forced — often at gunpoint — to carry out certain actions on their accounts.
These can include making withdrawals, providing their online banking login details, and paying money into criminals’ bank accounts, which are often opened with fraudulent details emptied before the bank can act.
Former Ombudsman for Banking Services Reana Steyn has explained that bank customers are liable for any transactions done using their own credentials.
“Unfortunately, though we truly sympathise with the victims of these incidents and understand they are not to be blamed for the crime, we also understand that banks cannot be blamed for the crime or losses as the kidnapping and robbery took place outside of the bank premises,” Steyn said.
The responsibility only shifts to the bank from the moment that the customer’s account compromise is reported, which cannot be done by the victims themselves until they are free.
Knowler has received a complaint of a case where Investec refused to refund R24,000 to a kidnapped customer after refusing the block the account without a case number.
Despite the family getting a case number from a police station and providing this to the bank, they were told the bank’s policy was to keep accounts open to protect the lives of kidnapped customers.
“Investec will not refund any of the money, even though it was their unilateral decision to keep my account open, despite my family having requested that they put a temporary hold on it,” the victim told Knowler.
National Financial Ombud (NFO) banking head Nerosha Maseti reiterated that measures like declining or delaying the processing of transactions could result in harm or even the loss of life of the customer, which would not be a justifiable outcome compared to financial protection.
Another big problem with refunding customers who had their money stolen under duress was that fraudsters could exploit their concession by staging their kidnapping and pretending that any actions or payments were made under duress.
Investec declined to provide comment to Knowler “out of respect for client confidentiality” and to not undermine its work with the authorities to combat crime.
“We appeal to our clients to take all possible steps to reduce their exposure and offer them detailed advice…on how best to do this,” the bank said.
Express kidnappings on the rise
Experts have labelled the types of kidnappings that the Investec customers experienced as “express kidnappings”.
In one quarter in 2023, there were over 4,500 kidnappings in South Africa— nearly 50 per day — making the country one of the world’s hotspots for this type of crime.
In many of these cases, victims are hijacked, held at gunpoint, and forced to withdraw cash at an ATM.
OLEA South Africa CEO Richard Hood has warned that high-net-worth individuals were no longer the only ones targeted.
“[The kidnapper’s] risk is determined by an individual’s location, community or nationality, vulnerability, and type of employment or business,” Hood said.
“Everyone is a potential target. Kidnappers change the ransom demands according to what they think the victim, or their families, can afford.”
Late last year, financial planner Paul Roelofse said that the increased adoption of cellphone-based payments could be a major contributing factor to the increase in kidnappings.
Ironically, one of the big reasons that criminals must kidnap victims is the enhanced security measures in the apps — like facial or fingerprint biometric verification.
Mobile banking apps generally also allow customers to substantially increase their daily transaction or withdrawal limits, which previously limited how money a criminal could extort from their victim.
“If you are with a phone, the kidnapper is going to want to keep you there, especially if you have got all these new security layers,” Roelofse explained.
However, he emphasised that using digital payments meant victims were much less likely to suffer financial damage to less hardened criminals — like pickpockets or snatchers.
“While mobile banking apps may indeed raise safety concerns in regions prone to kidnapping, leveraging mobile payment services like Google Pay, Apple Pay, or Samsung Pay can provide a secure and convenient alternative to physical cards,” Roelofse said.
“These services, fortified with tokenisation and encryption, offer an elevated level of protection against potential financial threats.”
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