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Press Release
Published January 10, 2018
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BDO apologises for fraud incidents, vows to intensify investigation

Date: January 10, 2018
Categories: Risk and Regulation, Transaction Banking
Keywords: BDO, Account Fraud

Facing snowballing complaints of unauthorized transactions, the country’s largest lender BDO Unibank apologized to customers and vowed to devote more manpower to fraud investigation.

“We want to let you know that we are very much aware of customers sharing their upsetting experiences of bank account fraud such as withdrawals and purchases done without their knowledge,” BDO said in a press statement on Wednesday.

“We sincerely apologize for the pain and grief that this caused our customers. Nothing is more important to us than your trust that we will be able to keep your money safe and secure. We would like to reassure you that we are committed to investigating and bringing resolution to each and every case brought to our attention,” the bank added.

BDO, the banking arm of the SM group, admitted an “extraordinary rise” in fraud attacks towards the entire industry starting October of last year. In particular, it reported a significant increase in claims of unauthorized online and offline purchases taking place in other countries.

“Given these extraordinary times we are committed to providing extraordinary short-term and long-term measures. We have significantly increased our human resources focused on fraud investigation. We have committed to a long-term effort to educating the public on how to better protect their account information.”

Some of BDO’s aggrieved clients, including some overseas Filipinos, used social media to express frustrations over the breach of their accounts.

BDO said it’s likely that crime syndicates were ramping up their efforts to collect card and information details, primarily through physical means such as skimming, or electronic means such as phishing and social engineering means, such as impersonating the card owner to get confidential information.

After the information is sold onto an online black market, any individual can access this black market to purchase the card information and use it for their own purposes, such as buying from online platforms.

In explaining how its investigation works, BDO said such incidents must be reported by the customer, after which the bank would launch an investigation to understand where the fraud took place. This was cited as a thorough and complex investigation process which involves five parties: customer, customer’s bank, third-party payment system (such as Visa and Mastercard), the third-party payment processor of the merchant and the merchant itself.

“It is a laborious process of tracing individual transactions and validating any irregularities and indications that there could have been fraud. Some of these parties in this process have to go through millions of transactions for verification. This is why it can take time for us to provide resolution to a customer’s case,” the bank said.

In an earlier statement issued on Tuesday night, BDO said it’s “tracing individual transactions, checking any irregularities and identifying signals of fraud from millions of valid transactions everyday.”

An investigation is needed before returning the customer’s money because based on BDO’s experience, about one-third of fraud cases are classified as “legitimate fraud” where the customer is truly a victim through no fault of their own because of bad elements such as crime syndicates. Customers are immediately compensated in such scenarios.

Some cases, however, are classified as “familiar fraud”. This is when friends or family use a customer’s accounts without their knowledge. A common example is when a PIN number is shared to a trusted person for use on their behalf and the person betrays that trust. Banks always advise that a customer keeps their PIN to themselves.

BDO said some complaints are “illegitimate” which means complaints had full knowledge of their transactions but claim otherwise to extract financial gain from the bank.

Re-disseminated by The Asian Banker from