By: René Basson
Recent Southern African Fraud Prevention Service statistics paint a concerning picture, reporting a 32% increase in fraud incidents and a staggering 54% rise in impersonation fraud victims compared to 2023. As October marks Cybersecurity Awareness Month, we urge the country’s investors to remain vigilant against the rising tide of digital fraud.
The digital landscape has become a hunting ground for sophisticated scammers. They're not just after your personal information; they're targeting your hard-earned investments. Globally, we're seeing increasingly clever tactics, from fake investment platforms to impersonation of financial advisers on social media. Investors must arm themselves with knowledge and exercise extreme caution, especially when encountering investment opportunities online.
Social media is a double-edged sword for investors
While social media platforms have become valuable resources for investment tips and financial news, they've also opened new avenues for fraudsters. Social media is well and truly integrated into our daily lives. However, investors need to stay alert, considering the increasing number of scammers taking to social media. Often, the scams are so believable it's easy to be deceived.
The Association for Savings and Investment South Africa (ASISA) also recently warned that investment companies have seen increased fraud via social media channels. Fraudsters have even taken to imitating key personnel by using their profile photos and company logos. If you receive a request for financial assistance from a family member or friend via social media, contact that person directly to ensure they are the person you're communicating with.
Protecting your digital financial footprint
Here are critical tips to help South African investors safeguard their investments and personal information:
Strengthen your passwords: Strong passwords are non-negotiable. Use at least 10 characters comprising a combination of upper and lowercase letters and special characters such as & or @. Use different passwords for different investment websites.
Embrace two-factor authentication: Two-factor authentication offers additional protection. A thief would need both your devices (cell phone and laptop) to access your account.
Keep software updated: Investors should regularly update and install anti-virus software on all their devices.
Avoid public wi-fi for financial transactions: Never use public wi-fi to perform financial transactions.
Timeless investment principles in the digital age
Its important to adhere to fundamental investment principles when evaluating investment opportunities online. As always, there are timeless truths regarding investing, and they apply equally to social media. Investors should keep the following in mind when considering investment-related content on social media:
Understand what you’re investing in: If you can't articulate it, don't invest in it. Does the investment suit your risk profile? Will you have to tie your money up for a certain period, and if you do, for how long? Who is offering the investment, and is it regulated? The FSCA's website lists all entities registered as authorised financial product providers.
Research and ask questions: Review their website after confirming that the company is authorised to sell the product. Do they provide contact details, and are they transparent about providing information on the company and its investment professionals? A Google search may also highlight the company's incidents.
Don’t be pressured into investing: Take your time to read through everything, understand the investment, read the fine print, and understand how the investment will fit into your overall portfolio. Only invest when you feel ready. Someone pressuring you into investing or providing your details is a warning sign. Scammers often use this tactic.
Trust your intuition: Trust your instincts if they tell you something about the social media post or investment isn't right. Get advice from an authorised financial adviser before proceeding with the investment.
If it sounds too good to be true, beware: Promises of high returns are warning flags – especially when markets are struggling – including promises of returns within a short period.
Verifying legitimate investment platforms
Investors should be particularly careful when interacting with investment firms online.
Investors should double-check they're on investment companies’ official social media pages before engaging or sharing any information. Investors can do this by visiting the company's official website and following links to their verified social media accounts.
What to do if you've been scammed
Investors who have fallen victim to an investment scam to report the incident to the police immediately and alert their bank. Quick action can sometimes mitigate the damage.
Take the time to review your online investment practices and strengthen your digital defences this Cybersecurity Awareness Month. Your financial future may depend on it.
* René Basson is the head of brand at Satrix.
PERSONAL FINANCE