Category Fraud/Crime

Are we winning the battle against fraud?

13 September 2023 Southern African Fraud Prevention Service (SAFPS)

Significant work has been done to address the impact of fraud and scams on the South African consumer. However, it is still pertinent to take a step back and ask if we are winning any major battles regarding addressing this challenge.

Statistics South Africa (StatsSA) recently released a report discussing South Africa's crime statistics. The report shows that while more consumers report fraud to the police, there is a growing decline in reported instances.

"This is concerning if we consider the potential financial impact of these crimes. Especially in instances where a person's life savings are lost," says Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS).

A significant loss
One of the key findings of the StatsSA report is that consumers who do not live in metro (urban) areas are more likely to become victims of fraud and scams than consumers who do live in these areas. This was highlighted in a recent media report detailing a Cape farmer's experience.

The media article points out that the farmer (hereafter referred to as the victim) first came across an advertisement for loans on the Messenger app (which is owned by Meta), which read: affordable cash repayment at a 5% rate from R20 000 to R20 million.

The victim came across this company on social media offering loans, so he applied for a R1 million loan for his farm. The victim pointed out that, at first, the scammers wanted lawyer's fees, which they would use to draw up a loan agreement. The scammers then added what they called Financial Intelligence Centre Act (FICA) fees. The scammers then added fees for the different agents that had to be paid.

The victim dipped into his pension fund on multiple occasions, believing he was a small step away from receiving the R1 million loan.

When the victim became concerned about the never-ending demands for additional payments so that his loan could be released, the scammers started fabricating letters from the South African Reserve Bank (Sarb), HSBC and other institutions, which led the victim to believe that the transaction was genuine. On 17 May 2023, the victim received a letter purporting to be from the Sarb claiming that R2.5 million was cleared for payment provided he paid up to R69 500 in additional fees. If he failed to pay this, the funds would be seized under FICA. A high-ranking Sarb official supposedly signed the letter.

The media article points out that the outfit offering the loan goes by the name of Mileage Financial with a fake address at 2 Long Street in Cape Town. The article adds that if consumers try to visit the website, a suspicious website advisory message will pop up on their internet browser. The media article indicates that the advertised phone number routes calls to a black hole. When an independent party tried to phone a cell number that one of the scammers provided the victim, the person on the other line refused to give her name or company details and claimed that the caller had the wrong number.

Ultimately, the victim was scammed out of R2.7 million in supposed fees. A criminal case has been opened and is being investigated by the South African Police Services.

An Empowerment Platform
"The experience of the Cape farmer is exactly why the SAFPS developed Yima," says Nazia Karrim, Head of Product Development at the SAFPS.

Yima is an innovative platform that features scam prevention and detection tools that South Africans can use to manage their risk when it comes to falling victim to a scam. Further, consumers can use Yima to report scams and secure their identity. They can also make use of the Verify’m functionality to biometrically verify the identity of a fellow South African citizen. In the farmer's case, he could have learnt about the tactics used in advanced fee loan scams on the Yima website to prevent himself from falling victim.

"Additionally, consumers scan any website for vulnerabilities related to scams. This would have been very beneficial in the Cape Farmer's case as the syndicate's website would have been flagged as suspicious from the outset," points out Karrim.

She adds that consumers can also educate themselves on identifying a scam or if they are being targeted by scammers. These tools, free of charge, will enable consumers to surf the internet safely.

"While Yima does not prevent online transaction banking fraud, it allows consumers to shop online more confidently by ensuring that they are using a verified website. Further, the education component of Yima allows consumers to go about their daily lives aware and informed about fraud. These are just some exciting elements South Africans can access through the site," says Karrim.

A key component of the website is the ability to report a scam incident or any suspicious activity to the SAFPS. This suspicious activity includes a fake or suspect-looking online shopping website/portal and instances where the user has received phoney banking information. Additionally, Yima users will have access to the consumer products and services offered by the SAFPS, such as the Protective Registration, which protects against identity theft and impersonation.

Karrim adds that a company that provides a once-in-a-lifetime offer can be tempting in the current economic environment. "However, if something looks too good to be true or sounds like an unbelievable deal, it is usually a scam. However, it is important to point out that not all consumers can easily make these distinctions. The SAFPS has recently added a decision tree to Yima, which will walk consumers through a thought-provoking process to help them identify a potential scam," says Karrim.

Karrim pointed out that this would also have been beneficial in the Cape Farmer's case as he would have been guided through a series of questions that would have opened his eyes to the fact that he was being scammed.

The power of one number
When a consumer becomes a victim of fraud, they have the responsibility to report this to the relevant authorities. Yima’s priority is to support the consumer before and after they fall victim to fraud and scams. Van Schalkwyk points out that when a person becomes a victim of fraud and has to report this to the relevant authorities, they are emotionally traumatised and confused, unable to coherently deal with the stress of becoming a fraud victim.

"One of the challenges of the past is that a fraud victim had to search for the contact details of the several different authorities required to report an incident, this was very stressful. That is no longer the case as fraud victims now have access to the Yima scams hotline that will address this challenge," says Van Schalkwyk.

Users will only need to remember one number rather than search for each institution's fraud contact centre’s numbers one at a time when they must deal with a difficult situation.

Van Schalkwyk adds that the SAFPS has partnered with MTN and several key stakeholders to launch a hotline number to report fraud. "By dialling 083 123 SCAM (7226), victims of fraud will be directed via interactive voice response (IVR) to relevant authorities such as the South African Police Service (SAPS) as well as their bank or other registered credit providers to report the incident. This will simplify the process of reporting fraud cases and hopefully alleviate some of the stress that victims of fraud experience," says Van Schalkwyk.

He adds that this is again another example of how the SAFPS is changing the narrative regarding a proactive approach to combatting fraud and what the power of collaboration can contribute to fraud prevention.

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