Fraud one of biggest risks for South Africans

Fraud has become one of the biggest risks for South Africans as the South African fraud landscape increased steadily over the past five years. The 2024 Fraud Statistics indicate a 32% increase in the number of incidents reported to the Southern African Fraud Prevention Service in 2023.

“This increase is alarming and indicates how South Africans are becoming easy targets for fraudsters and scammers who are highly motivated to find their next victim,” Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS), says.

He says certain sectors are more open for fraudsters than others. Banking fraud made up 45% of the fraud incidents reported last year, 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,” Van Schalkwyk says. Money muling is still one of South Africa’s most significant challenges, followed by forged documents, impersonation fraud and employee application fraud.

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Fraudsters and scammers becoming increasingly creative

He points out that fraudsters and scammers are becoming increasingly creative in scamming consumers. 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 happens when someone approaches a victim claiming they must receive money from a family member in another country and need a bank account to perform this transaction.

Van Schalkwyk says many people want to help and willingly let these fraudsters use their bank accounts but 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. The guilty party will be listed with the SAFPS and the result is that you 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.”

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Falsified qualifications for job applications

Employee application fraud is another big problem. South Africa is currently in the midst of an economic crisis that has little to no resolution, causing an increase in the unemployment crisis, which is also becoming a major issue in the country.

“To provide for their families many people are turning towards application fraud, where they forge documents to show they have specific qualifications for the job that they are applying for, while they do not,” Van Schalkwyk says. This is one of the primary reasons why the retail industry is under increased pressure, he adds.

As in previous years, Gauteng, KwaZulu-Natal and the Western Cape are the main centres that experience fraudulent activity, but there has been a significant increase in the Free State as well.

“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. Our investigations have picked up that this is driven by money muling, which is very prevalent in the province,” Van Schalkwyk says.

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How to protect yourself

These statistics show how important it is for consumers to use the SAFPS’ Protective Registration to protect themselves with an extra layer of protection. Protective Registration is a free service protecting individuals against future fraud.

After consumers register for this service, the SAFPS alerts its members to take additional care when dealing with the individual’s details. Protective Registration provides an added layer of protection and peace of mind regardless of whether the applicant’s identity has been compromised.

Consumers can register on the SAFPS website at www.safps.org.za and click on the fraud prevention tab. For the best results, use your smartphone.

The 2024 Fraud statistics were released before the SAFPS Fraud Summit takes place next week. “The SAFPS Fraud Summit is an important event to discuss fraud and create awareness about fraud tactics and how to combat fraud. SAFPS believes that a proactive approach to fraud prevention will always trump a reactive approach,” says Van Schalkwyk.

Garth De Klerk, CEO of the Insurance Crime Bureau, who will speak at the summit, says it is important to consider the increase in and abuse of our digital identities. “This is an important topic as most of South Africa’s fraud has moved online due to the anonymity online fraud offers scammers and fraudsters. Technology also made identity theft and impersonation easy,” Van Schalkwyk says.