The gang works by stealing credit card, debit card and ATM card details. They then make forged cards which yhry use to buy items or to withdraw cash.
Already, some members of the syndicate have been arrested and convicted but many more are still at large.
Last Monday, Bulgarian Nikolov Andrian Hriston was sentenced to three years in jail by Nairobi chief magistrate Gilbert Mutembei after he pleaded guilty to credit card fraud. The Bulgarian was arrested on July 11 as he was withdrawing money from a Pesapoint ATM at Nairobi’s Lavington Green shopping centre using a variety of fake cards.
Others in the queue became suspicious when he made multiple cash withdrawals using different cards. They alerted security guards who called the police.
The suspect was found with 13 fake cards. Four accomplices in two cars escaped when police arrived.
At the time of his arrest, Hriston had over Sh700,000 in his pockets, and it as later found that he had made many cash withdrawals at different ATMs in the city.
He is also suspected to have been involved in card fraud in Malindi, Mombasa and other towns.
Early this year, a suspected operative of the Sri Lankan separatist terror group — Liberation Tamil Tigers of Elam (LTTE) — Balakumar Poluthurai was arrested at 680 Hotel after he attempted to pay his bills using different fake credit cards. He is also believed to have withdrawn an unknown amount of cash using the cards. The holder of a Norwegian passport had 72 fake credit cards, according to a report by The Sunday Times Sri Lankan writer Asif Fuard.
According to the Banking Fraud Investigations Unit boss, he was charged but the details were not immediately available.
On July 8 this year, Delhi police busted a credit fraud syndicate and arrested three Nigerians who were using cloned cards to buy expensive mobile phones. The Delhi Police recovered mobile phones with instructions and PIN numbers from Kenya.
These incidents are just a fraction of credit and ATM card fraud cases perpetrated by an increasing number of organised international and local syndicates. So serious is the problem that the United Nations Office in Nairobi (UNON) regularly posts advisories to visiting staff to be careful whenever they use credit cards in Kenya.
According to the Kenya Credit and Debit Card Association chairp Catherine Mogambi, of the Sh35 billion transacted through credit cards in 2007 in Kenya, about Sh40 million is lost to credit card fraudsters annually.
Ms Mogambi concedes that card fraud exists in Kenya just like in other countries. “In this market, there is no insurance for fraud, and banks have to absorb the loss in their books. The total fraud figure for the industry is below the threshold compared to total sales due to prudent management and training of staff, customers and retail merchants”, she says, adding that Kenyan banks like Commercial Bank of Africa have invested in transaction monitoring systems like SMS transaction alerts to minimise fraud.
Cardholders receive SMS alerts whenever they shop, and if the transaction is not theirs, they will promptly inform their bank and the card is cancelled, preventing further usage.
Waiters, cashiers, petrol station attendants and other staff who handle cards are believed to work with the fraudsters in swiping cards from customers through a gadget that “reads” the account information encoded in the magnetic strip at the back, then make duplicate cards.
Cases abound of ATM card holders who find thousands of shillings withdrawn from their accounts at night in places they have never been to. And more often than not, the victims stop following up on their money due to lengthy investigation processes.
And, according to the head of the Banking Fraud Investigations Unit, Paul Ndambuki, the syndicates are mainly operated by people from Eastern Europe, West Africa and Asia, in collaboration with Kenyans. Several cases of credit card fraud by syndicates operating in Kenya have been detected in the United Arab Emirates and Dubai.
“Most of the cases involve international credit cards lost in Europe, but transactions are conducted in Kenya. However, we have been receiving several reports from victims in Kenya who report that withdrawals were made from their bank accounts although they had their ATM cards when it happened.,” he said.
Skimming syndicate
Mr Ndambuki says that his investigators have alerted hotels, supermarkets and banks over card fraud after a waitress reported that a fraudster had attempted to recruit her into the card skimming syndicate. Very little information is available on credit card and ATM fraud because banks keep such records secret for various reasons. But counterfeit cards and “cloning” of lost cards remain the most common ways in which credit and debit card fraud is perpetrated.
Some employees in postal and couriers service firms involved in scrutiny of registered mail are believed to be working with the fraudsters, to whom they sell the card information for up to Sh100,000.
Five years ago, the fraudsters intercepted a credit card belonging to an East African First Lady as it was being delivered from Britain via a courier and withdrew millions of shillings before it was detected. The courier firm involved reimbursed the First Lady.
Investigations by the Nation indicate that a machine for making duplicate cards is at the Westlands shopping centre. Blank cards are made and the encoded information from a swiped card inserted.
The fraudsters usually travel far away from the card owners’ locations, mainly Mombasa and Malindi; but if the card is stolen from the Coast, the fraudsters travel to Nairobi. The fraudulent transactions are usually conducted between 10pm and midnight in lonely booths when there is least supervision and less chances of the bank contacting the genuine card holder to verify the transactions.
By DOMINIC WABALA
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