Express kidnapping: when disclosing banking details leads to financial loss

People who are forced to disclose confidential banking information during a kidnapping often have limited recourse, because they are typically held liable for any resulting financial losses.

At the release of the crime statistics for the fourth quarter of the 2023/24 financial year and the first quarter of the 2024/25 financial year late last month, the Minister of Police, Senzo Mchunu, said crime was generally on the increase. Mchunu said crimes that should worry the public the most are murder, rape, hijacking, kidnapping for ransom payments, and extortion.

“We have been reading about kidnappings and extortion cases in the media; 135 cases of kidnapping for ransom were recorded in the first quarter, with Gauteng and KwaZulu-Natal accounting for 81 and 15 cases respectively,” he said.

According to the Statistics SA report, as of the 2022/23 financial year, the total number of kidnapping cases in South Africa reached 15 343. Gauteng had the highest incidences of kidnapping, with 7 818 reported cases, while KwaZulu-Natal had 3 081 cases in the same period. This sudden increase is associated with the rising levels of organised violent crime in the country.

The Institute for Security Studies (ISS) stated that kidnappings reported to the police have almost quadrupled (260%) over the past decade. The South African Police Service’s crime statistics for the third quarter of 2023 (October to December 2023) showed that kidnappings had increased by 11% year-on-year to 4 577 cases over the period – working out to roughly 51 kidnappings a day in South Africa.

In a recent interview with Newzroom Afrika, Lizette Lancaster, the manager of the South African Crime and Justice Information and Analysis Hub at ISS’s Justice and Violence Prevention Programme, highlighted the alarming rise in kidnapping syndicates:

According to Lancaster, these groups have rapidly evolved since the onset of the Covid-19 pandemic, becoming more organised and targeting a wide range of individuals.

“These kidnapping syndicates seem to be prolific,” Lancaster stated. “They seem to target various types of individuals, and the increase has been specifically steep since the Covid years, which shows that they’ve become very organised in a very short period of time.”

Lancaster pointed out that many cases go unreported, making it difficult to grasp the scope of the issue.

“We don’t always know who gets targeted, because not all cases are reported to the police,” she explained. However, data from late 2023 paints a stark picture: “Out of that 50 a day that we saw between October and December last year, only around two of that 50 a day are for kidnapping for ransom or extortion, the high-profile cases that make it into the news where high-value people are targeted by what seems to be very sophisticated syndicates.”

Most kidnappings, Lancaster clarified, are associated with robberies and carjackings, often involving attempts to force victims to withdraw money via banking apps or bank cards. “The motive is actually robbery, often trying to withdraw cash from your banking apps and your bank cards. And those are known as express kidnappings; that’s over 60% of these types of kidnappings.”

Sexual offences and human trafficking-related kidnappings make up a smaller proportion of cases. Lancaster said, “But, of course, not all cases are reported to the police, and this is important – the number, especially of ransom kidnappings and extortion kidnappings, may be far more than what we know.”

A trend has also emerged involving foreign nationals running cash-based businesses in local communities.

“What we see are often the kidnappings of what seems to be foreign nationals running cash shops in local communities targeted by extortion groups. When they are not willing to pay protection money, they become easy targets,” Lancaster explained. “Often, they are made examples of or are forced to pay extortion money. If they don’t, they get kidnapped and held for ransom.”

Lancaster also touched on the growing role of transnational syndicates in these crimes, often targeting businesspeople with foreign roots. “We’ve seen transnational syndicates in operation, targeting businesspeople that might have foreign roots. But some are South African businesspeople who operate formal businesses and, in some cases, transnationally,” she noted.

And she said, they’ve seen South Africans being kidnapped, particularly the express kidnappings, for their bank cards and phone apps.

“Those are very real threats to ordinary South Africans.”

Liability for loss

In response to reports of a rise in kidnappings targeting entrepreneurs, the National Financial Ombud Scheme (NFO) confirmed it has received complaints where victims were forced to disclose confidential banking information under duress.

Nerosha Maseti, Lead Ombudsman of the NFO’s Banking Division, explained that this issue was discussed at the NFO’s recent annual banking workshop.

“The discussion also explored possible and available measures to help banking consumers safeguard their financial information and mitigate financial losses,” said Maseti.

The NFO suggested that fraudsters are increasingly resorting to kidnappings as banks have strengthened security on online platforms, making it harder to obtain customers’ banking information. Maseti noted that criminals often force victims to reveal their online banking passwords during kidnappings.

“Once criminals gain access to these platforms, they can alter account limits and make unauthorised transfers leading to significant financial losses in addition to the trauma of the kidnapping itself,” she explained.

The NFO investigates consumer complaints against banks and financial service providers.

“If, after investigation, it is found that the bank could have prevented or mitigated the customer’s losses but failed to do so, the NFO’s banking division has the power to recommend to the bank involved to refund the portion of the customer’s losses that could have been prevented but for the bank’s negligence,” she said.

As an example, the NFO cited a recent case where a complainant was kidnapped and forced to disclose their online banking credentials, resulting in unauthorised transactions amounting to R103 092.

Although the bank’s fraud-monitoring system flagged the suspicious activity and contacted the victim, they confirmed the transactions under duress. After their release, the complainant sought a refund, but the bank denied the claim, saying the complainant had disclosed confidential information.

The NFO investigated the case, examining the bank’s terms and conditions, which state that customers are liable for transactions made before the bank is notified of unauthorised activity.

“Unfortunately, all the funds transferred out of the complainant’s accounts had already been utilised prior to the bank being made aware of the incident. Therefore, the bank was not found negligent in mitigating the complainant’s loss,” said Maseti.

Given the circumstances, the NFO found no legal grounds to hold the bank liable.

“The complainant was essentially a victim of a crime in which the bank was not involved. However, the bank agreed to refund a portion of the loss as a gesture of goodwill,” Maseti added.

Although customers are typically liable for losses before notifying the bank, liability shifts to the bank once the compromise is reported. In such cases, banks are expected to mitigate further losses.

The NFO stated that each case is assessed individually, and banks may offer partial refunds based on a customer’s vulnerability and personal circumstances. However, confirming whether confidential information was disclosed under duress remains a complex challenge for banks.

The NFO provided these tips for prevention and mitigation. The tips are similar to those for any hijacking risks.

• Be cautious when posting online. Avoid posting sensitive financial information or sudden changes on social media. It is extremely important to be vigilant about what information you share on social media and the perceptions you create about yourself, your family, and your friends. Avoid posting about a sudden influx of funds, as this can make you a target for criminals.
• Do not draw unwanted attention to yourself. Wearing expensive jewellery, carrying high-end branded items, or carrying other valuables in public may attract unwanted attention.
• Vary your daily routine as often as possible. Diversify your daily activities to reduce predictability. Criminals may monitor predictable routines well before the actual crime is perpetrated to ensure that a person is vulnerable to criminal targeting.
• Consult your bank. Discuss the measures your bank may offer to help mitigate potential losses if you become a victim of any type of banking fraud. Many banks provide options to tailor your online banking and app experience, including limiting your exposure and risk.
• Consider investment options. Use accounts with restricted access to limit potential losses. In some instances, investing in a notice account may reduce access to your funds, thereby limiting your overall loss.
• Consider insurance. Check whether your bank offers duress insurance or trauma counselling services.