FID uncovers new fraud scheme

The Financial Investigations Division (FID) says it has detected a troubling rise in refund fraud in Jamaica.

During this six-month period, January to June 2023, the FID said it uncovered 120 cases of refund fraud, involving a total of 840 transactions (798 processed and 42 attempted), with a combined value of more than $133 million.

These fraudulent activities involved 140 individuals targeting 135 international merchants. Investigations revealed that all perpetrators were Jamaican nationals, with Kingston and St Andrew (31 per cent) and St Catherine (26 per cent) accounting for more than half of the refund fraud transactions.

Refund fraud typically involves the fraudulent use of stolen credit card details for an online purchase, followed by the fraudster contacting the e-commerce store to demand a reimbursement.

A common tactic among refund fraudsters is to intentionally overpay, then request a refund for the excess amount while asking for the money to be transferred via an alternative method. This allows the fraudster to pocket the 'excess' without risking a refund of the original credit card charge, which might trigger a charge-back when the legitimate cardholder disputes the transaction.

Keith Darien, principal director of investigations at the FID, said financial institutions and designated non-financial institutions have been urged to exercise heightened caution. This includes implementing 'red flag' mechanisms within their anti-money laundering frameworks to identify and prevent transactions of this nature.

"This issue remains an ongoing concern, and substantial efforts are under way to effectively combat it and bring perpetrators to justice," Darien added.