Do you know how to spot a scam?

There were between R219 million to R363 million gross losses in digital banking in 2022 due to scams. Independent Newspapers.

There were between R219 million to R363 million gross losses in digital banking in 2022 due to scams. Independent Newspapers.

Published Mar 24, 2024


There were between R219 million to R363 million gross losses in digital banking in 2022 due to scams, according to Ntshiki Maluleka from the South African Banking Risk Information Centre (Sabric).

He said the increase occurred during a shift from visiting bank branches and performing banking online during the Covid-19 pandemic. He said scammers took advantage and opportunity of the shift.

“These are losses that are impacting the community at large. These surges are associated with the attributes that are growing in several banking applications because we are doing our banking on the app, online, and even via SMS, that is where they take advantage using their social engineering element, where they will talk with us leading us to compromise our personal details.”

Maluleka was speaking at a webinar titled: Do you know how to spot a scam? that was hosted by The Financial Planning Institute of Southern Africa (FPI) in honour of Global Money Week (GMW).

GMW is an annual global awareness-raising campaign that focuses on the importance of ensuring that young people, from an early age, are financially aware and are gradually acquiring the knowledge and skills necessary to make sound financial decisions and ultimately achieve financial well-being and financial resilience. This year it is on March 18-24.

Maluleka said Sabric is a non-profit organisation mandated by the banking industry that is its member to keep the public informed about the latest scams and to make sure that people do not end up being statistics.

“We want to see people being productive and being able to keep their money safe,” he said.

According to Maluleka, Sabric has seen many cases of phishing, spoofing, and business email in terms of digital banking crime.

“We have seen quite a number of surging money mules that because they are targeting our unemployed, and if you can look at the unemployment statistics released by Statistics South Africa, they show that there was an alarming increase of unemployed citizens, you will find scammers say, if you lend me your account you can get 50 bucks.

“And if you're unemployed, you might do it, but you need to be cautious because you will be the one who will be arrested if you lend someone your bank account to facilitate any kind of money laundering,” he said.

Maluleka cautioned citizens on email scams and said that they need to be careful of emails with links. He said people should look at the links carefully as they might lead to other fraudulent websites and that these websites can harvest personal information and banking information.

“Another telltale sign in these websites is when you don't see the lock at the bottom. The lock at the bottom signifies that it is safe to do your transaction or to conduct any communication with that website. We emphasise to the general public not to click on any links that are sent via email, and your bank will never solicit any information from you via this type of communication.”

He said it was important to communicate with the person on the other end by calling the bank to verify if it is them you are in communication with.

Maluleka said debit and credit card fraud was also on the rise, through online purchases. He said that was done by compromising the CVV numbers that are on the back of the cards.

“Once you insert your details, make sure that it is a secured website, and as soon as you cash out, delete your banking account details to ensure that the website doesn't make additional purchases.”

He said it was important for consumers to register for two-factor authentication with their banks. This could help in getting multiple notifications when purchases are made.

Maluleka said ATM skimming was also prevalent, where fraudsters copy card information using devices. “Do not transact on ATMs where you see there are loose objects. ATMs that are shady where they are sitting by themselves in a corner somewhere in the mall, make sure there is security out there and that there is visibility, where there are people around to avoid kidnappings because sometimes they target people while they are transacting at the ATM, and they kidnap them to empty their account. Never allow assistance from people who are just loitering,” he said.

Meanwhile, the Financial Sector Conduct Authority (FSCA) head of the Department of Consumer Education, Lyndwill Clarke, said the Conduct Authority is the financial market conduct regulator in South Africa.

“That means that everybody who sells your financial product or service needs to be authorised or registered or licensed by the FSCA. We are sitting in such a dire economic situation in South Africa, everybody is looking for a way to get rich quickly. Sometimes you don't always think about what are the consequences of clicking on some websites, or agreeing to a certain proposition,” he said.

Clarke said the other kind of fraud in the financial sector that the FCSA has noticed was Ponzi schemes. A Ponzi scheme is when you pay out your investor, and they promise double returns.

“Locally on the smallest scale, we've seen that smaller operators, they start the Ponzi scheme, and once they've got enough money, they leave and disappear.”

He said people need to ask for documentation. “The first thing to ask is: Are you authorised by the FSCA to sell this product? That is where the first line of defence is because normally there is no product. They need to give you the product, in which category is the product? They need to tell you. They need to tell you how it works. They need to do the due diligence, especially to see whether you can afford this product. Sometimes you'll see that there is no credit card required. No, this is not required, no that is not required. Come to us, you can invest. Those are also warning signals,” he said.

Clarke urged consumers to call the FSCA on 0800 203 722 to check if financial services companies are registered with them.