Fraudulent transactions in frozen Absa account take R20,000 from “shadow overdraft”

Fraudulent transactions to a PayPal account, having their Absa cheque account frozen, and money taken from an overdraft facility they did not apply for – this has been the experience of a MyBroadband reader.

The reader, who is an Absa client, told MyBroadband about the series of events which left him asking what was going on with Absa’s systems.

He first noticed there was a problem when his wife informed him she saw a fraudulent transaction on their Absa cheque account. This took place on 21 February 2018.

R4,800 was transferred to a PayPal account from the Absa bank account.

After contacting the bank , it cancelled her bank card as a precaution and to prevent further fraudulent transactions.

The client then received a new bank card, which was not working correctly, and so she was re-issued another new bank card.

On 9 May, however, R5,200 was transferred from the client to what appeared to be the same PayPal account.

Absa reportedly told the couple the transaction occurred on the card that was cancelled in February, and it would investigate.

Shadow overdraft

There was more concern from the MyBroadband reader and his wife, though, as the Absa account did not have an overdraft facility – but the fraudulent transfer took the account into a negative balance.

The couple asked Absa how this was possible, and was reportedly told that all Absa cheque accounts have a “shadow overdraft” facility.

This allows limited overdrawing based on a client’s credit risk profile and history with the bank, he was told.

On 10 May, the couple was hit by another R5,200 transaction from their Absa account to the same PayPal account.

Absa was again contacted, and it told the client the case was logged with the fraud department and the investigation would take three weeks.

Unfortunately, on 11 May, another R5,200 was transferred to the PayPal account – pushing the Absa account balance further into an overdraft.

Absa was contacted again, and it advised the client to freeze the account. The couple agreed and froze the account.

The client was then advised to open a new cheque account, and transfer all debit orders and salary payments to the new account.

They were reportedly told by Absa that no further transfers would take place on the frozen account.

Not over yet

To their amazement, the couple received a transaction SMS on 12 May, stating another R5,200 was transferred from the “frozen” account.

The couple again contacted Absa, who said the matter was being investigated.

On 13 May, another R5,200 was transferred to the PayPal account.

The frozen account balance now stood at -R24,000.

The couple told MyBroadband that after contacting Absa, they were informed the PayPal transactions were created on 20 April and were only being actioned now.

Fortunately, they said Absa refunded them for four of the fraudulent transactions on 14 May.

This joy was short lived, though, as on 15 May the couple said two things happened:

  • Absa refunded the couple for a total of seven transactions, although there had only been five. This meant Absa had given them just over R10,400 too much.
  • Another fraudulent transaction came off the “frozen” Absa account that evening.

“In my humble opinion, Absa’s back-office operations and forensics are in disarray. How can the fraud just be continuing?” stated the reader.

“I just wonder how many customers are being affected.”

The reader requested that his name not be published in the article, but provided full details of his interactions with Absa.

Single transaction which re-posted

Absa told MyBroadband that in the case above, the customer was hit by a single fraudulent transaction.

The transaction was incorrectly re-posted to the account multiple times after Absa’s attempts to recover the funds from the acquiring bank were rejected.

“The customer’s account has now been corrected and we are closely monitoring the account to ensure this does not happen again, said Neil Thompson, Chief Operating Officer: Absa Card and Payments.

Thompson said the fraudulent transaction was made on PayPal using the cardholder’s account details.

“This was a single transaction which was incorrectly re-posted to the account. If this had been a new transaction after the account was frozen, it would have been rejected at the point a request was received to authorise the funds.”

Thompson said the customer’s account has been corrected and Absa are closely monitoring it to ensure all is in order.

Now read: Digital banking makes physical branches better – FNB CEO

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Fraudulent transactions in frozen Absa account take R20,000 from “shadow overdraft”