Category Fraud/Crime

Beware of tax-related scams amid panic or excitement

27 October 2023 Southern African Fraud Prevention Service (SAFPS)

The end of October signals the culmination of a busy period for the South African Revenue Service (SARS). The deadlines for filing the first portion of Provisional Tax (for the six months ending 31 August) and the annual filing of Personal Income Tax (23 October) give SARS plenty to assess and audit in the weeks following these important dates.

"Unfortunately, this is a time when scammers become very busy," says Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS). He adds that, over the past five years, the SAFPS has seen a steady increase in the number of tax-related scams.

Improved efficiency
In an effort to improve efficiency when it comes to processing tax returns and to encourage individuals and businesses to file their tax returns timeously, SARS launched its eFiling service in 2000, which allows taxpayers to file their returns electronically.

"Unfortunately, this provided scammers with increased opportunities to turn taxpayers into fraud victims," says Van Schalkwyk.

Fraudsters use a very focused modus operandi when running this scam. In the weeks following the tax deadlines, taxpayers will typically receive an SMS informing them that they have yet to file their tax returns and may face significant penalties. This message typically includes a link for the taxpayer to follow to check if they have filed their tax or a phone number to call and follow up on the issue.

"It is important that taxpayers do not click any link in an SMS. If there is an issue, SARS typically puts all of its correspondence on its eFiling system and will send correspondence to the tax payer informing them to log onto eFiling to view this correspondence. It will not provide a link in an SMS," says Van Schalkwyk.

He adds that if there is an issue that taxpayers want to follow up on, they should either call the SARS call centre or visit their nearest SARS branch.

To improve efficiency when processing returns, SARS has been known to pre-assess some individuals before they file their returns. This is typically done on individuals who use the same metrics when filing their returns annually. Following this assessment, SARS deduces whether an individual owes SARS money or is entitled to a rebate from SARS.

"Individuals who have been pre-assessed will typically receive an SMS from scammers claiming to be SARS informing them of the result of their pre-assessment. This message typically includes a link for the taxpayer to follow to follow up on this correspondence. Again, it is important that taxpayers do not click any link in an SMS as it may be a scam. SARS communicates the outcome of these assessments on its EFiling system. Instead, log onto your EFiling profile, call the SARS call centre or visit a SARS branch to follow up on this," says Van Schalkwyk.

A major tool
In response to the increased level of scams in South Africa, the SAFPS launched Yima, a platform offering online tools to combat these scams. Van Schalkwyk points out that the Yima platform has proven to be very effective in the proactive fight against fraud.

"In response to the growing need for a proactive approach to fraud prevention, the SAFPS launched Yima. Yima is a one-stop-shop website for South Africans to report scams, secure their identity, and scan any website for vulnerabilities related to scams. They can also educate themselves on identifying a scam. These tools will enable consumers to surf the internet, access key products such as online banking and money transfers more confidently, and make their daily lives aware and informed. These are just some exciting elements South Africans can access through the site," says Van Schalkwyk.

The main element of the website will be 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. These reports will be collated and shared with law enforcement for investigation. Users will also be provided a scams hotline to report a fraud incident directly to their banks, retailers or insurance companies via a single number. Users only need to remember one number rather than search for each institution's contact numbers online.

Additionally, Yima users will have access to the consumer products and services offered by the SAFPS.

One line to rule them all
The main element of Yima is the ability to report fraud and scams that lead to fraud. Van Schalkwyk points out that when a person becomes a victim of fraud and has to report this to the relevant authorities, they have one emotional bucket to deal with the stress related to becoming a fraud victim.

"One of the challenges of the past is that a fraud victim had to approach several different authorities to report the case and begin trying to address the situation. This was very stressful. This is no longer the case as fraud victims now have access to one hotline number to address this challenge," says Van Schalkwyk.

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

He adds that this is once again another example of how the SAFPS is changing the narrative when it comes to a proactive approach to combatting fraud.

Quick Polls


How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?


Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now