The Financial Investigations Division (FID) has identified a concerning trend, referred to as “refund fraud,” that has surfaced within Jamaica’s financial sector from January to June 2023. Over the six-month period, the FID uncovered 120 instances of refund fraud involving a total of 840 transactions (798 processed and 42 attempted), with a monetary value exceeding J$133 million as shown in the table below.
| Entities | Number of Reports | Transaction Count
(attempted and processed) |
J$ Value |
| Commercial Banks | 114 | 338 | 33,525,083.69 |
| Credit Unions | 6 | 56 | 44,284,847.44 |
| Others | – | 446 | 55,559,590.02 |
| Grand Total | 120 | 840 | 133,369,521.15 |
The fraudulent activities implicated 140 individuals who targeted 135 overseas merchants. Subsequent investigations revealed that the perpetrators, all Jamaican nationals, are distributed across all parishes. Notably, Kingston & St. Andrew (31%) and St. Catherine (26%) accounted for over half of the refund fraud transactions.
In response to these findings, the FID has engaged relevant stakeholders across the financial sector to disseminate information about this emerging trend and provide effective mitigating strategies. Special attention was directed towards entities obligated to report to the FID, including financial institutions and designated non-financial institutions.
The FID has actively supported these institutions in identifying key indicators related to “refund fraud” and has equipped compliance officers within reporting entities with insights into observed techniques and trends targeting overseas merchants.
To fortify the financial system against the risks associated with “refund fraud,” the FID strongly recommends that financial institutions and designated non-financial institutions exercise heightened caution. This includes reinforcing monitoring systems and implementing “red flag” mechanisms within their anti-money laundering (AML) frameworks to identify and prevent transactions of this nature.
Keith Darien – Principal Director of Investigations, FID
Keith Darien, Principal Director of Investigations at the FID, remarked, “As countries and their respective financial sectors improve their anti-money laundering (AML) framework, we observe a corresponding evolution in the tactics employed by fraudsters. The emergence of refund fraud exemplifies this evolution.”
Darien continued, “This issue remains an ongoing concern, and substantial efforts are underway to effectively combat it and bring perpetrators to justice. Those results will be disclosed at an appropriate juncture.
In the meantime, it is crucial to remind the nation that the FID’s monitoring and financial intelligence-gathering capabilities are quite robust.
These capabilities enable us to detect emerging trends and address them effectively, supporting the fortification of the country’s AML framework and conducting world-class investigations for evidence-based prosecutions in the Court.”
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About Refund Fraud
Refund fraud is often used when the fraudster cannot get goods delivered to their address and can’t withdraw cash from a stolen credit card.
In refund fraud, the fraudster uses stolen credit card credentials to make an online purchase, and then contacts the e-commerce store to request a reimbursement.
A common refund fraud tactic is for the fraudster to deliberately make an excess payment, then request a refund for the excess amount while requesting that the money be sent via an alternative method (e.g. by claiming the credit card was closed). This way, the fraudster can receive the “excess” amount without having the original credit card charge refunded, which could result in a chargeback when the original owner of the credit card makes their disputes.
(Source – https://datadome.co/learning-center/7-types-of-ecommerce-fraud-how-to-prevent-them/