Criminals are coming after your bank account in South Africa

 ·4 Oct 2024

South Africa faces an increasing number of fraud cases, and certain types of banking fraud are thriving, as banking fraud accounts for most cases reported.

Impersonation fraud, also known as identity theft, has surged by 337% over the past year, reaching its highest level as criminals increasingly open or take over accounts using stolen identities.

“This increase is alarming and indicative of how South Africans are becoming easy targets for fraudsters and scammers who are highly motivated to find their next victim,” said Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS).

According to Van Schalkwyk, the fraud landscape has steadily increased over the past five years, making this one of the top risks South Africans face daily.

The 2024 fraud statistics show a 32% increase in the number of fraud incidents reported to the SAFPS in 2023 and a 62% increase in fraud listings.

“Once again, specific sectors are more open for fraudsters than others. Banking fraud made up 45% of the fraud incidents reported last year.

“This was followed by the microfinance sector (19%) and the clothing retail sector (14%). This indicates that financial institutions and the retail sector are under significant pressure regarding fraud”.

As with previous years, Gauteng, KwaZulu-Natal, and the Western Cape are the main centres that experience fraudulent activity.

However, there has been a significant increase in the Free State.

“While the Free State is only a small contributor to the country’s fraud statistics, the province has experienced a 56% increase in fraudulent activity.

“Our investigations have picked up that this is being driven by money muling, which is very prevalent in the province,” said Van Schalkwyk.

Money muling is another major concern, accounting for 43% of fraud cases, a dramatic rise from 22% in 2021.

Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS)

This scheme involves fraudsters convincing victims, often under false pretences, to use their bank accounts to move illicit funds, which are frequently tied to serious criminal activities such as drug trafficking and terrorism.

“The repercussions of being a money mule are significant,” warns Manie van Schalkwyk, noting that individuals involved could be blacklisted from accessing credit for up to 10 years

Other types of fraud also pose a substantial threat, with phishing, smishing, and vishing scams increasingly targeting consumers.

According to TransUnion’s latest Consumer Pulse Report, 60% of South Africans were targeted by some form of digital fraud.

Phishing accounted for 33% of the cases, followed closely by smishing and vishing, which involve fraudsters using text messages and phone calls to extract sensitive information.

“These numbers show how important it is for consumers to monitor their credit records regularly,” advises TransUnion.

The report underscores the growing need for vigilance as digital transactions become more prevalent.

A key factor driving this surge in fraud is South Africa’s economic instability. Unemployment remains high, pushing many individuals toward desperation, which makes them more susceptible to participating in or falling victim to scams.

“To provide for their families, many more employees are turning towards application fraud,” said van Schalkwyk, emphasising that fraud is putting on both financial institutions and consumers alike

In response, South African banks and financial institutions have stepped up efforts to combat fraud.

Capitec Bank has rolled out enhanced security features and regularly warns its clients to be cautious of unsolicited emails and messages.

“Customers should be aware that the bank will never ask for their PIN or password via phone or email. It’s critical to verify the legitimacy of any request before responding,” said a spokesperson from Capitec.

Additionally, Discovery Bank has issued frequent alerts about common scams, advising customers to be vigilant when receiving unfamiliar links or requests for personal information.

The SAFPS has also taken proactive steps to address the growing fraud problem.

The organisation launched platforms such as Yima, which allows consumers to report scams and verify the legitimacy of websites before making online purchases.

“We cannot stand by and take a reactive stance when it comes to combatting fraud,” said van Schalkwyk, stressing the importance of public education in preventing further incidents.


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