A R7m (US $911,331) Internet banking scam in South Africa, which experts say may only be the tip of the iceberg, represented a world first in breaching SMS-based based banking integrity.
Vodacom technician Mbokodana Christopher Khoza has appeared in the Johannesburg Commercial Crimes Court on charges of fraud and contravening the Electronic Communications Act. Khoza is allegedly at the center of the scam, which intercepts SMS messages from banks to customers on the Vodacom network.
The case had to postponed by seven days after it was revealed that another R3.3m (US $429,653) had been removed from accounts.
The security breach was bound to happen “sooner or later,” said Costin Raiu, chief security expert at Kaspersky Lab, a company headquartered in Moscow which has offices worldwide. “This incident is, as far as we know, a world first”, he explained. “It only enforces my opinion that SMS-based authentication, while providing a bit better security than simple username-password combos, is outdated and no longer sufficient by itself.”
Vodacom spokesperson Dot Field says additional security measures have been implemented,to ensure that this type of fraud does not happen again. “Vodacom is working closely with the SAPS and Sabric (South African Banking Risk Information Centre),” Field said, adding that due to the immediacy of online banking, customers should keep their online banking details secure from any third party.
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