Desperate to secure holiday travel and accommodation, people can easily overlook scams.
Desperate to secure holiday travel and accommodation, people can easily overlook scams.

Times might be tough, but don’t fall for these scams

By Martin Hesse Time of article published Mar 28, 2021

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Fraudsters and fly-by-nights appear to be taking advantage of consumers’ financial vulnerabilities during the Covid-19 pandemic, because several agencies and financial services companies are warning of a higher incidence of various types of scams.

Last year, a Transunion survey revealed that 38% of South African consumers had been a target of digital fraud related to Covid-19, with 5% having lost money.

There are essentially two types of financial fraud: those in which a fraudster actively targets you, by, for example “phishing” for your personal details and using them to access your bank or store accounts; and those in which you are lured through false promises into a financial product or service that turns out to be high risk or an outright scam. This article focuses on the latter.


The Financial Sector Conduct Authority (FSCA) says it has noted with concern the increasing volume of losses related to crypto assets (which include cryptocurrencies such as Bitcoin and Ethereum) suffered by consumers in the past three months, and warns that, currently, investments in these assets do not carry regulatory protection.

The FSCA, in conjunction with other authorities, has released a draft declaration on the regulation of crypto assets, but nothing has yet been made law.

In a recent statement, the FSCA says: “The draft declaration does not affect the status of crypto assets in the context of other laws, nor does it attempt to regulate, legitimise or give credence to crypto assets.

“The FSCA would like to emphasise that crypto-related investments are not regulated by the authority or any other body in South Africa. As a result, if something goes wrong, you are not likely to get your money back and will have no recourse against anyone.

“The high risks already inherent in crypto assets are further compounded by scam activity, as well as unregulated firms targeting consumers with marketing material that highlights the rewards, but not the potential downside, of investing in crypto. It is for this reason that the FSCA is working at finding measures to regulate certain aspects and players in the crypto asset space. These measures will be rolled out during the coming months.”


A recent wave of investment videos on the social media platform TikTok appear to be downplaying the risks of the investments they are marketing.

TikTok boasts more than 800 million users worldwide, mostly between the ages of 16 and 24.

“Users should be wary of videos that portray lifestyles that seem too good to be true. Taking financial advice from online social platforms may have devastating consequences on your finances, especially if you are starting on your financial journey,” warns Nomi Bodlani, head of strategic markets at Allan Gray.

Under the hashtags “Fintok”, “Moneytok”, “financetok”, “howtoinvest” and “personalfinance”, many videos count their views in the billions. Many appear to be “get-rich quick” schemes, showing off expensive cars and big houses.

They share financial advice “nuggets” or promote certain investments, using catchy lines such as “retire a millionaire” and “one stock that could make you rich”.

In many cases, the people behind these videos have no financial qualifications and some have a history of peddling promises of making money quickly and easily.

“In these difficult times, where many families are struggling, these kinds of promises of dreams and money can sadly fool even the most astute,” Bodlani says, adding that the messages in these videos are “reckless, dangerous and very misleading”.

“Many investors fall prey to scammers because they do not have a solid financial plan. A good, independent planner will explore your unique set of circumstances and implement a long-term investment strategy to help you reach your financial goals,” she says.


Annelene Dippenaar, chief legal and compliance officer at Experian Africa, says Experian has seen an increase in so-called “credit repair agents”, who claim to fix your credit report and improve your credit score, charging an upfront fee for doing so.

Dippenaar says that in South Africa charging consumers an upfront fee to fix a credit report is illegal. She says all the credit bureaus offer a free credit information dispute process. You need to obtain a free copy of your report and check it yourself.

“Contact the bureau directly to dispute any incorrect information. You will need to supply a copy of your ID document (or passport if you’re a foreign national), proof of address (not older than three months), and any supporting documentation (such as an account, statement, or settlement letter). The bureau will then investigate the dispute with the data provider – this process can take up to 20 business days.”

Dippenaar says that an agent would need to follow the same process and supply the same documentation, and it would take the same amount of time. “There is no special process for credit repair agents,” she says.

She says an agent cannot change your credit profile – only a credit bureau can do that – and is not able to improve your score.

“Only you can do that by ensuring the data on your report is accurate and up to date, and improving the information on your report by using credit responsibly and paying your full instalments on time.”


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