Category Fraud/Crime

Don’t be an Ass (mule) this festive

06 December 2022 The Ombudsman for Banking Services (OBS)

The festive season is a time to be enjoyed, spending quality time with family and showering others in kindness and generosity. However, the South African festive season is also, unfortunately, synonymous with fraud. If history is anything to go by, many South Africans are expected to fall victim to fraud during this period.

The Ombudsman for Banking Services (OBS), Reana Steyn, advises South Africans that scammers and fraudsters are likely to intensify their activities during the holiday season. “It is important to note that these fraudsters do not discriminate or have any regard for their victim's age, race or profession. Unfortunately, it is often the elderly that are most vulnerable and most likely to be left devastated by these fraudsters,” says Steyn who adds that these fraudsters are not acting alone but are often part of well-run criminal syndicates.

The financial losses caused by these fraudsters often evolve into a societal problem and their after-affects may result in long term irreparable financial and emotional damage to families, especially those from a less privileged background. “For this reason, it is important that all South Africans remain vigilant to the existence of these fraudsters, whose mission is to defraud anyone they come in contact with. Often, large sums of money – sometimes a person’s whole life savings – are wiped out in the process,” says Steyn.

The OBS points out that most victims only report these crimes long after they have been committed, meaning that the investigations are often delayed, giving these criminals the chance to escape. Consumers then ask the banks to refund the monies they paid over to fraudsters. However, these requests cannot be met by the banks who acted on the client’s instructions. Steyn further points out that consumers are, unknowingly, the biggest enablers of these crimes as they act as money mules.

What are Money Mules?

Money mules are regular consumers with a bank account. These consumers act upon a request for help and allow another person to transact through their account. Not knowing that the party asking for help is a fraudster, the consumer then receives the money into their account. These funds are then moved out of the account by way of withdrawal or transfer to a different account to ensure that the victims of the fraud do not recover it.

“The success of these scams is largely dependent on the ability of fraudsters to convince ordinary and, in many instances, unsuspecting legitimate account holders, into helping a person in need. However, it is very important to note that bank account holders are responsible for what happens with their accounts. An accountholder who, knowingly or unknowingly, aids any fraudster, is considered an accomplice by the letter of the law. As a result, criminal charges, as serious as money laundering, may be brought against them,” warns Steyn.

She points out that her office was aware that ordinary South Africans are only trying to be helpful, assisting friends and strangers by receiving monies into their accounts without knowing the legitimacy of their origins. Steyn’s recommendation to bank customers who find themselves in situations where they were asked to be money mules is to contact their banks before transferring or withdrawing the funds or handing them over to someone else. Consumers should also do everything in their power to establish the legitimacy of the payments. Only if the payment is not disputed, should the funds be released.

Case Study

A bank customer lodged a complaint with the OBS that her bank had listed her at the Southern African Fraud Prevention Services (SAFPS) as a fraudster. As such, she was prevented from opening any other bank account. The complainant advised that she plead her case with her bank and requested them to remove the listing on her name since she was never involved in any fraudulent activities but merely assisted her friend in receiving money through her account.

Upon investigation, the OBS established that the funds received into the complainants account were the proceeds of a crime that was being investigated by the Hawks. It was also established that the so-called friend had subsequently been killed in a shoot-out with the Hawks. Since the complainant admitted to allowing a third party to use her account, the OBS ruled that, as the account holder, the complainant was liable for the transactions within the account and that the SAFPS listing was justified.

Consequences of being a money mule:

Steyn warned that anyone found to be a money mule is opening themselves up to potential criminal liability, punishable by law. She added that claiming that you were not aware of the crime may not suffice as ignorance of the law and ignorance is not a valid defence. Additionally, as noted from the case study above, acting as a money mule has the confirmed likelihood of damaging one’s credit and financial standing.

Other common scams:

Steyn advised that fraudsters are still using the most common but tried and tested scams such as internet banking fraud (phishing), vishing scams, deposit scams, change of banking details scams (email interception scams) and ATM card swapping. This is taking place on a daily basis, commonly defrauding thousands of consumers. “As the Ombudsman has done in the past, we are urging consumers to ensure that they educate themselves about the threats and modus operandi that fraudsters use in order to protect themselves and their money,” says Steyn

Apart from the ATM scams, the OBS has noted that all of these other scams are highly sophisticated and are amongst the most lucrative of all financial crimes. It is therefore safe to assume that these scams will continue in the future unless fraudsters are stopped in their tracks.

Tips for banking customers to better protect themselves:

Protect Yourself: Avoid Being a Money Mule
• Do not allow your account to be used by another person for any transactions, even if the person is known to you. Do not fall for a sad story which is designed to pull on your heartstrings; and
• If you have any doubts about the origin of the money, or if a transaction appears unusual, report it to your bank and verify the details.

Protect Yourself: Vishing Fraud Prevention Tips
• Never share personal and confidential information such as card number, PIN, password, OTP, with strangers over the phone even if your Caller ID gives the name of a bank, or some other company or organisation. Do not believe it when the person says they are calling from your bank; and
• If you lose cell phone connectivity for some time for no apparent reason, receive an SMS for a Sim swap or a number port you did not request, contact your bank’s fraud department and then your network service provider immediately.

Protect Yourself: Phishing Fraud Prevention Tips
• Do not click on links or icons in unsolicited emails;
• Check that you are on the authentic website before entering any personal information;
• If you think your device may have been compromised, contact your bank immediately and request that your account be blocked; and
• Avoid public WIFI connections and internet cafes for your online banking and purchasing.

Protect Yourself: ATM Fraud Prevention Tips
• Never ask a random stranger for assistance at the ATM and be wary of strangers asking you for help or distracting you; and
• If your card is retained, phone your bank’s toll-free stop card line immediately and stop your card. Do not allow bystanders to call the toll-free stop card line on your behalf - they could be tricking you into thinking your card has been stopped.

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