South Africans play a role in becoming scam victims

Issue 7 2023 Editor's Choice, Risk Management & Resilience

The South African fraud landscape is becoming increasingly risky as fraudsters and scammers look to target individuals with highly sophisticated scams, in an environment where it is becoming increasingly difficult for lawmakers and authorities to bring these criminals to justice.

"International Fraud Awareness Week is held from 12 - 18 November, and it is important to remain aware of the risks fraud poses to us locally and globally. In particular, South Africans need to be aware of how they are impacted by fraud and the urgency of implementing proactive prevention measures in their daily lives," says Nazia Karrim, Head of Product Development at the Southern African Fraud Prevention Service (SAFPS).

As the custodians of fraud in southern Africa, and to mark International Fraud Awareness Week, the SAFPS collaborated with several industry professionals and drilled down into the issues challenging too many South Africans.

A sophisticated stepping stone into Africa

While South Africa is not the largest economy on the continent, it is one of the most diverse, and very sophisticated compared to its continental peers.

Connectivity in South Africa is increasing, with Statistics South Africa showing that more than half the population has access to smart devices. Computers are prominent in South Africa, essential tools for running businesses, and are used extensively at home for private use.

Danny Myburgh, MD of Cyanre, points out that many people may not be aware that South Africa is a safe haven for cybercriminals using the country as a stepping stone into Africa. He adds that South Africa is one of the countries with the highest rate of scams perpetrated on the rest of the world.

He points out that scammers are increasingly assuming the identities of high-level South African business professionals (CEOs, CFOs, and COOs) and running scams. "Because scammers ran scams from specific countries in the past, a business professional will be reluctant to do business with a business executive from that country. However, they will be open to doing business with a South African business executive because of our reputation," says Myburgh, adding that scammers are aware of this and are taking advantage of it.

One of the biggest scams being run in South Africa, targeting businesses, is known as a business email compromise scam. Hackers will access the mailbox of a high-level manager within a company and then spend almost 200 days assessing how they can run a lucrative scam. "Some instances involve a scammer changing the banking details of invoices or purchasing orders so that the money is filtered to them. Other scams involve accessing important information or client data and then holding it for ransom. Statistics from the US show that almost $300 million is lost to these types of scams every month globally," says Myburgh.

Additionally, South Africans are easy targets when it comes to phishing scams. "It does not take a lot for a scammer to send out 1000 phishing emails, and if they only get a 5% click-through rate, they will reap a high reward," says Myburgh, who points out that authorities are fighting a losing battle against these criminals as there is significant anonymity associated with their crime. The victim pool is global rather than local, which is also a considerable problem.

"If you combine the unemployment crisis with the prevalence of technology and the low level of training needed to run these scams, one can see why they are so popular," says Myburgh.

A complicated situation

In addition to cybercrime being a major issue, banking fraud is a significant risk many South Africans face.

Kevin Hogan, Head of Fraud Risk at Investec, echoes Myburgh's sentiments and points out that the techniques used to perpetrate fraud have not changed much over the years. The increased number of victims essentially boils down to sophisticated phishing scams and bad password habits. "Consumers have more responsibilty in becoming victims than they care to admit," says Hogan.

Hogan admits that it is more complex than careless consumers and that these scams are becoming highly sophisticated. He adds that it is becoming such a challenge that lawmakers have flagged this with banks and are even ruling against them in some cases. "There is currently a law that is in the process of being passed in the UK which states that if a consumer makes a payment in good faith, and it turns out to be a scam, the bank receiving the payment and the bank authorising the payment will be jointly responsible for refunding the victim."

An important tool

Because of the increase in scams in South Africa, the SAFPS launched Yima, a platform offering online tools to combat these scams. Karrim points out that the Yima platform has proven very effective in the proactive fight against fraud.

"Yima is a one-stop-shop website for South Africans to report scams, secure their identity, and scan any website for scam vulnerabilities. They can also educate themselves on identifying a scam. These tools will enable consumers to surf the internet more safely, access key products such as online banking and shopping sites more confidently, and remain actively aware and informed about fraud and scams in their daily lives. These are just some exciting elements South Africans can access through the site,” says Karrim.

One of the main elements 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. These reports will be collated and shared with the relevant authorities to assist in syndication identification. Users can also use the scams hotline, 083 123 SCAM (7226), to report a fraud incident directly to their banks, retailers, insurance companies or police 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, and all these tools come at no cost to the consumer.

The SAFPS helping hand

The common thread in both Myburgh and Hogan's engagements with the SAFPS is that South Africans have a greater role to play in themselves becoming victims than they care to admit. This may be because of poor password habits, but it may also be because they are unaware of the changing nature of these scams and how scammers can lull consumers into a false sense of security, which turns them into victims.

"Banks are unaware of how to prevent consumers from becoming victims of scams, and they are finding it hard to tackle the education component of fraud prevention because you are dealing with a diverse range of people with varying levels of education and who come from different LSM markets. It becomes extremely challenging," says Hogan.

Manie Van Schalkwyk, CEO of the SAFPS, points out that the SAFPS will always do its best to offer the consumer tools to help prevent them from becoming victims.

"It is interesting that both Myburgh and Hogan mention that education is a problem. If the SAFPS can highlight one message this International Fraud Awareness Week, it is that Yima has extensive resources when it comes to fraud awareness education. These resources range from communication regarding updated fraud tactics to case studies on how consumers became victims. Yima also has a decision tree that helps consumers decide if they are about to become a scam victim. The SAFPS encourages all consumers and businesses to use Yima and take advantage of its functionality," says van Schalkwyk.

Readers can listen to the podcasts below on fraud in South Africa.

1. Investec’s Head of Fraud Risk, Kevin Hogan, discusses how the banking sector manages fraud and scam threats.

2. Cyanre’s Managing Director, Danny Myburg, explains the impacts of cyber fraud on South Africans.

3. Luno’s Fraud Risk Manager, Chris du Toit, talks us through cryptocurrency investment do’s and don’ts.

The YIMA hotline is +27 83 123 SCAM (7226)

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