The South African fraud landscape has increased steadily over the past five years, making this one of the top risks South Africans face daily, according to the Southern African Fraud Prevention Service (SAFPS).
“This increase is alarming and indicative of how South Africans are becoming easy targets for fraudsters and scammers who are highly motivated to find their next victim,” says Manie van Schalkwyk, CEO of the SAFPS, adding that the recent SAFPS Fraud Statistics paint a comprehensive picture of where criminals target consumers and how consumers become victims.
The 2024 Fraud Statistics point out a 32% increase in the number of fraud incidents reported to the SAFPS in 2023.
“Once again, certain sectors are more open for fraudsters than others,” says Van Schalkwyk. “Banking fraud made up 45% of the fraud incidents reported last year. This was followed by the Micro Finance Sector (19%) and the Clothing Retail Sector (14%). This indicates that financial institutions and the retail sector are under significant pressure regarding fraud.”
Looking specifically at how fraud is perpetrated in these sectors, Van Schalkwyk points out that money muling is still one of South Africa’s most significant challenges – forged documents, impersonation fraud, and employee application fraud follow this.
Van Schalkwyk points out that fraudsters and scammers are becoming increasingly creative when it comes to scams. Money muling has again been flagged as a significant issue, and many South Africans are becoming willing victims.
One of the most common forms of money muling is when a victim is approached by someone claiming that they need to receive money from a family member in another country and they need a bank account to perform this transaction. Many people want to help and willingly let these fraudsters use their bank accounts. While this may seem an innocent crime, research from Cifas in the UK points out that money-muling funds activities such as drug and human trafficking, and terrorist activities.
“The repercussions of being a money mule are significant,” says Van Schalkwyk. “The guilty party will be listed with the SAFPS and the result is that the individual could struggle to get access to finance for 10 years. It is one of the biggest issues that the SAFPS is currently facing – and it is important for the public to know about the seriousness of this crime.”
South Africa is currently amid an economic crisis that has little to no resolution. This is causing an increase in the unemployment crisis which is also becoming a major issue in the country.
“To provide for their families, many more employees are turning towards application fraud,” explains Van Schalkwyk. “This is the practice whereby they forge documentation which may indicate that they have specific qualifications which would make them a suitable candidate for the job that they are applying for. This is one of the primary reasons that the retail industry is under increased pressure.”
As with previous years, Gauteng, KwaZulu-Natal, and the Western Cape are the main centres that experience fraudulent activity. However, there has been a significant increase in the Free State.
“While the Free State is only a small contributor to the country’s fraud statistics, the province has experienced a 56% increase in fraudulent activity,” continues Van Schalkwyk. “Our investigations have picked up that this is being driven by money muling, which is prevalent in the province.”
There is a silver lining to the increased fraud statistics. Because of the risks people face, South Africans are increasingly turning towards the SAFPS’ Protective Registration to give them an extra layer of protection.
Protective Registration is one of the SAFPS’ most essential services and is the core of its offering.
Protective Registration is a free service protecting individuals against future fraud. Consumers apply for this service and the SAFPS alerts its members to take additional care when dealing with that individual’s details. Protective Registration provides an added layer of protection and peace of mind regardless whether or not the applicant’s identity has been compromised.
“If a member of the public wants to become proactive in the fight against fraud, the SAFPS is there to serve them,” says Van Schalkwyk. “Visit our website at www.safps.org.za. Then, click on the fraud prevention tab and protect yourself against identity theft with Protective Registration. For best results, use your smartphone to go to our website. Once you have uploaded key pieces of information, you will add another layer of protection against potential ID fraud.”
The 2024 Fraud statistics are released in the lead-up to the SAFPS Fraud Summit, which takes place at the Indaba Hotel from 15 to 16 May 2024.