How to protect yourself from the growing threat of fraud in South Africa

Fraud, simply put, is deception for financial gain, and according to the Financial Sector Conduct Authority (FSCA), it's becoming a serious threat affecting thousands of South Africans each year.

The FSCA says the Southern African Fraud Prevention Service (SAFPS) reported an alarming 356% rise in impersonation fraud between April 2022 and April 2023. Additionally, the South African Banking Risk Information Centre (SABRIC) noted a 36% surge in reported online banking fraud incidents in 2024.

"These figures underscore the need for heightened awareness and vigilance to recognise and avoid scams that could seriously impact your finances and security," it said.

According to the FSCA, to highlight the urgency, SABRIC recently revealed that financial crimes led to losses nearing R3.3 billion in 2023. Digital banking fraud, in particular, saw a significant increase, with incidents rising by 45% and related financial losses jumping by 47%. Fraud on banking apps now makes up 60% of all digital banking crimes, with an 89% year-on-year increase, illustrating the growing threat to consumers’ financial security.

The FSCA stresses the importance of staying informed and adopting preventive measures. "If consumers fail to adopt preventive measures, the financial repercussions are likely to grow," an FSCA spokesperson says.

According to the regulator, studies show that for every rand lost to fraud, an organisation incurs an additional cost of R3.64 due to indirect expenses like labour, investigation, and external fees. These figures highlight the wider financial impact fraud can have on individuals and the economy, reinforcing the need for consumers to take proactive steps now.

Common fraud schemes and scammer tactics

Fraudsters are continually evolving their techniques. Here are some common tactics:

• Impersonation Fraud: Scammers may pose as legitimate Financial Service Providers (FSPs) through fake websites, emails, and phone calls to trick you into sharing sensitive information or transferring funds. Always verify the identity of any FSP you interact with.

• High-pressure tactics: Fraudsters create urgency, pushing you to act quickly before you have time to think. This tactic is often used in “you’ve won a prize” schemes or urgent “security alerts” from supposed FSPs or banks.

• Phishing and smishing: Fraudsters use emails or SMS messages that appear to be from trusted institutions to prompt you to click on links or enter personal information, exposing you to risk.

Best practices for fraud prevention

Taking proactive steps to protect yourself is crucial. Here are some essential practices:

• Verify Financial Service Providers (FSPs): Use the FSCA website to confirm their registration. Never trust contact details in unsolicited communications alone and verify independently.

• Use strong, unique passwords: A strong password is one of the simplest yet most effective ways to protect your online accounts. Use a mix of letters, numbers, and symbols, and update passwords regularly.

• PIN security: Choose a PIN that’s difficult to guess, preferably with 5-8 digits, and avoid common patterns like "1234" or your birth year.

• Guard against high-pressure tactics: If someone pressures you into making a quick financial decision, take a step back. Legitimate service providers won’t push for instant responses.

• Exercise caution with unsolicited communication: Be wary of unsolicited emails, texts, or calls requesting personal or financial details. Confirm the legitimacy of any communication by contacting your FSP or bank directly.

• Stay informed about the latest scams: Follow trusted sources like the FSCA and SAFPS to stay updated on the latest fraud tactics.

What to do if you’re a victim of fraud

• If you or a loved one falls victim to fraud, quick action is essential:

• Report to Your Bank: Contact your bank’s fraud department immediately.

• File a Report with Law Enforcement: Report the incident to the South African Police Service (SAPS).

• Notify Financial Regulators: Contact the FSCA and the Financial Advisory and Intermediary Services Ombudsman.

• Consult SAFPS: By reporting the matter to the SAFPS, you contribute to a fraud-tracking database that helps authorities protect the public.

The FSCA says fraud is a real and growing threat to financial security in South Africa.

"By staying informed and vigilant, consumers can protect themselves from becoming victims. As fraud tactics evolve, so must our methods for safeguarding ourselves, our finances, and our communities," it said.

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