Telecommunications fraud is on the rise in South Africa, with the sector seeing one of the highest suspected digital fraud attempt rates globally. In 2023 alone, 15,5% of all suspected digital fraud attempts in South Africa targeted the telecom industry, marking a staggering 78% increase year-over-year.
By Amritha Reddy, senior director for solutions at TransUnion Africa
This trend highlights the magnitude of the issue and emphasises the critical necessity for the industry to bolsters its defences.
A Perfect Storm for Fraud Growth in South Africa’s Telecom Sector
South Africa’s telecommunications sector is one of the fastest growing in the country. The number of mobile connections in South Africa increased by 4,2-million (+3,7 percent) between the start of 2023 and the start of 2024.
The Covid-19 pandemic accelerated the sector’s shift online as customers moved to digital channels for critical transactions, such as new contracts and upgrades, that were once conducted in-store. While convenient, this rapid shift left security gaps, and fraudsters have been quick to exploit them.
“Fraudsters are constantly evolving their tactics to exploit new weaknesses,” says Amritha Reddy, senior director for solutions at TransUnion Africa. “While telecom companies are investing heavily in security and consumer education, the rapid expansion of digital services can make it difficult to stay ahead.”
How Telco Fraud Unfolds and Why It Matters
The methods fraudsters use are becoming increasingly sophisticated. Many fraudulent accounts, an estimated 3% of new digital accounts in telecom, are created using stolen or synthetic identities. Criminals use techniques like phishing, smishing, and vishing to trick consumers into divulging sensitive data, which is then used for identity theft, SIM swaps, or even bypassing multi-factor authentication (MFA).
A compromised telco account is often the first step in a chain of digital fraud attempts. For instance, a SIM swap can give fraudsters access to one-time-pins (OTPs), enabling them to breach online banking accounts and execute large financial transactions. The implications are significant: beyond financial losses, businesses face reputational harm that can erode consumer trust in digital services.
Consumer Trust in Digital Channels is Declining
According to TransUnion’s 2024 State of Omnichannel Fraud Report, 54% of South African consumers reported being targeted by fraudsters, and many are responding by stepping back from online shopping. The report shows a decrease in e-commerce engagement from 45% in 2021 to 34% in 2023.
Concerns about data security have even led 40% of consumers to abandon online purchases mid-checkout
“Every digital interaction has the potential to be a target for fraud,” says Reddy. “When customers feel their security is compromised, trust can be eroded, leading them to reconsider the channels they use or even switch to other brands.”
Combating the Rise in Telecom Fraud: A Call to Action
To protect consumers and rebuild trust, telecom providers must enhance digital defences and further invest in continuous education campaigns that empower consumers. Practical tips, such as avoiding unknown links and regularly updating passwords, are critical in thwarting social engineering attacks.
But the solution also demands a coordinated industry response. Companies should consider sharing data on fraud tactics and trends across sectors, as fraudsters tend to move rapidly between similar targets. Enhanced collaboration, both locally and internationally, will be key to staying ahead of increasingly agile cybercriminals.
“The best defence is a unified approach,” says Reddy. “By working together and using advanced, data-driven fraud detection technologies, we can outpace fraudsters and create a safer digital environment for all.”