South Africans are facing an increasingly risk-based landscape when it comes to fraud with huge surges in incidents such as identity theft, money muling, and a multitude of both physical and digital scams.
“Our research shows that identity theft has grown by more than 300% between 2021 and 2022,” says Manie Van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS). “Additionally, cases involving money muling have increased by 97% over instances recorded in 2021.”
These stats are extremely concerning and highlight the need for an increased conversation that needs to occur at a national level about raising fraud awareness.
“In addition, it is important that South Africa makes a stand against fraud and starts putting actionable steps in place to move towards a proactive approach to combat fraud,” says Van Schalkwyk.
Money muling: a growing international problem
Like other fraud scams, money mule scams are run by professional, well-organised, and well-financed syndicates that capitalise on a person’s desire to be a Good Samaritan.
“One of the most common forms of money muling is when a victim is approached by someone claiming that they need to send money to a family member in another country and they need a bank account to perform this transaction,” Van Schalkwyk explains. “Wanting to help, many people willingly let these fraudsters use their bank account.”
While this may seem like an innocent crime, the repercussions of becoming a money mule are significant, he adds.
Scams: a low hanging fruit
Traditionally, South Africa has been a popular country among fraudsters looking for every opportunity to try and find their next victim. SAFPS statistics point out that there was a 600% increase in incidents reported by their members in 2022 when compared to 2018. These include your conventional advance-fee scams, banking scams, and impersonation scams whereby a scammer can take control of a person’s identity.
“We need to be cognizant of the fact that there are a plethora of scams that the public can fall victim to – and these are growing every day,” says Van Schalkwyk.
Taking ownership of your biometrics
One of the biggest challenges in South Africa is that consumers often discover that they have become a victim of impersonation fraud after the crime has already been committed.
“By this stage, the damage has already been done as fraudsters may have upgraded cell phone contracts, opened clothing accounts, and raked up other significant debts that the victim, unfortunately, has to deal with,” says Van Schalkwyk. “Therefore, the reactive nature of fraud prevention is consumers’ biggest challenge – and the SAFPS must deal with it.”
The risks of digitalisation
Since the early 2000s, South Africa has made significant investments in digitalisation, catching up with the rest of the world and the impact technology has had on the future development of many global economies.
The penetration of smartphones in South Africa cannot be underestimated. Research shows that there are currently 26,3-million smartphone users in South Africa. This has grown from 9,7-million smartphone users in 2014. Digital technology is taking off in South Africa and will be a significant business platform for companies in the future.
“While digitisation will revolutionise the South African economy, it has risks,” says Van Schalkwyk. “According to a 2021 Interpol report, South Africa tops Africa in cyberthreats and is third in the world with 230-million threats detected in 2021. Of these, 21-million threats were related to emails.”
A hotbed of fraudulent activity
The South African insurance industry has been an industry that has been a traditional hotbed for fraudsters.
According to research by the Association for Savings and Investment South Africa, South African life insurers detected 4 287 fraudulent and dishonest claims in 2021. This was a significant increase over 2020, where life insurers uncovered 3 186 cases of fraudulent and dishonest claims.
Knowledge is power
Given the increasing fraud landscape and the fact that new risks are emerging daily, Van Schalkwyk feels that a national discussion is essential and that the SAFPS will have a vital role to play in the future of fraud prevention.
“We cannot let fraudsters and scammers get the upper hand,” he says. “Knowledge is power, and we have to give consumers every opportunity to be aware of the landscape that faces them.”