Master Card Caught Fraud Perpetrators in Ukraine

MOSCOW, Russia -- Friday night Master Card Europe distributed a press release saying that in Ukraine officials had stopped activity of a criminal group accused of committing fraud with credit cards. Master Card of Europe made this step to calm bankers and their clients because early Friday two Russian banks reported fraud through bank machines in Ukraine.

Two weeks ago, Raiffaizenbank (Moscow) stopped accepting its cards through bank machines in Ukarine. At that time, a member of the board of Raiffaizenbank, Alexander Koloshenko stated that recently “the cards that were used in the territory of Ukraine more than anywhere else were objects of schemes and frauds including compromising of the PIN code.” Last Friday two more Russian banks – Slavyaski Bank and Master Bank – shared the fears of Raiffaizenbank. They put on their web sites warning for clients about the high risk of fraud with the plastic cards in Ukraine.

For instance, the Department of Plastic Cards of Slavyaski Bank says in its warning “we ask that unless you have an urgent needs, do not use your bank cards to receive cash in the bank machine located in the territory of the Republic of Ukraine until the current situation is resolved.” The vice president of Slavyaski Bank Maxim Belov explained to Kommersant the appearance of such warnings was made after reading of the Kommersant article of March 15. The other reason, according to his words, was “we had two cases of fraud in ATM transactions in Ukraine this year. However, with only two cases from 100,000 (that’s how many cards the bank issued) we cannot make straight conclusions. In Southeast Asia at the same time there were many more frauds.” Belov thinks “it’s always better to overreact and warn the clients in the form of recommendation.”

Master Bank also warned its clients practically the same way. “Because of a large number of frauds with plastic cards in Russian banks in Ukraine, Master Bank does not recommend that use your cards in the territory of this state.” The bank also reminded clients that if they want to check all the operations done with cards they can join a free system of personal control. In other words, they can receive information on any transactions on the account online and through the cell phone as SMS message. The head of the payment transactions department of Master Bank, Oleg Safonov, explained to Kommersant “Our recommendation to the clients is based on the analysis of the developing situation in order to forecast and prohibit in the future possible increases in the number of fraud operations.”

The level of increased fraud among the Ukrainian bank machines from the fall of last year has become a hot topic among participants in the plastic card markets. The participants of this market noticed that percentage of compromised plastic cards in Ukraine was quite high, and that shows that the problem has a wide-spread character. The fraud of the PIN codes can be evidence of the existence of criminal groups which act from some processing center. Raiffaizenbank was worried about the existing situation and early this month asked Master Card and Visa to “find the root of the crime.” So far Visa did not react on the request of Raiffaizenbank. But Master Card of Europe, to calm down the Russian bankers and their clients, distributed an official press release last Friday.

“In August of last year, Master Card of Europe discovered fraud operations that were committed with Master Cards in ATM machines in Ukraine, says the press release. In order to prevent losses for card holders, Master Card, together with Ukrainian law enforcement, took measures for fast and effective resolution of this situation. The result of this active cooperation was halting fraud operations and arrest of culprits.” However the names of those arrested or the volume of the fraud, Master Card did not publish in its press release. “Master Card officially did not let us know about its actions and for that matter I think it would be not correct to comment on the situation right now,” said Koloshenko to Kommersant on Friday.