The South African fraud landscape has steadily increased over the past five years, making this one of the top risks South Africans face daily.

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

The recent SAFPS Fraud Statistics paint a comprehensive picture of where criminals target consumers and how consumers become victims.

A 32% increase in fraud incidents

The 2024 Fraud Statistics point out a 32% increase in the number of fraud incidents reported to the SAFPS in 2023.

"Once again, certain 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 Micro Finance Sector (19%) and the Clothing Retail Sector (14%). This indicates that financial institutions and the retail sector are under significant pressure regarding fraud," says Van Schalkwyk.

Looking specifically at how fraud is perpetrated in these sectors, Van Schalkwyk points out that money muling is still one of South Africa's most significant challenges; forged documents, impersonation fraud and employee application fraud follow this.

The Money Mule challenge

Van Schalkwyk points out that fraudsters and scammers are becoming increasingly creative in scams. Money muling has again been flagged as a significant issue, and many South Africans are becoming willing victims.

One of the most common forms of money muling is when a victim is approached by someone claiming that they need to receive  money from a family member in another country and they need a bank account to perform this transaction. Many people want to help and willingly let these fraudsters use their bank accounts. While this may seem an innocent crime, research from Cifas in the UK points out that money-muling funds activities such as drug and human trafficking and terrorist activities.

"The repercussions of being a money mule are significant. The guilty party will be listed with the SAFPS, and the result is that the individual could struggle to get access to finance for ten years. It is one of the biggest issues that the SAFPS is currently facing, and it is important for the public to know about the seriousness of this crime," says Van Schalkwyk.

Employee application fraud

South Africa is currently in the midst of an economic crisis that has little to no resolution. This is causing an increase in the unemployment crisis, which is also becoming a major issue in the country.

"To provide for their families, many more employees are turning towards application fraud. This is the practice whereby they forge documentation which may indicate that they have specific qualifications which would make them a suitable candidate for the job that they are applying for," says Van Schalkwyk, who adds that this is one of the primary reasons why the retail industry is under increased pressure.

Regional epicentres

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," says Van Schalkwyk

Protective Registration

There is a silver lining to the increased fraud statistics. Because of the risks people face, South Africans are increasingly turning towards the SAFPS' Protective Registration to give them an extra layer of protection.

Protective Registration is one of the SAFPS' most essential services and is the core of its offering.

Protective Registration is a free service protecting individuals against future fraud. Consumers apply for this service, and the SAFPS alerts its members to take additional care when dealing with that individual's details. Protective Registration provides an added layer of protection and peace of mind regardless of whether the applicant's identity has been compromised.

"If a member of the public wants to become proactive in the fight against fraud, the SAFPS is there to serve them. Visit our website at www.safps.org.za. Then, click on the fraud prevention tab and protect yourself against identity theft with Protective Registration. For best results, use your smartphone to go to our website. Once you have uploaded key pieces of information, you will add another layer of protection against potential ID fraud," says Van Schalkwyk.

2024 Fraud Summit

The 2024 Fraud statistics are released in the lead-up to the SAFPS Fraud Summit, which takes place at the Indaba Hotel from 15 to 16 May 2024.

"The SAFPS Fraud Summit is an important event in that talking about fraud and making the public and businesses aware of fraud tactics is an effective way to combat fraud. SAFPS believes that a proactive approach to fraud prevention will always trump a reactive approach," says Van Schalkwyk.

Garth De Klerk, the CEO of the Insurance Crime Bureau, will deliver an important address on the rise and abuse of our digital identities. "This is an important topic as most of South Africa's fraud has moved online because of the anonymity that online fraud offers scammers and fraudsters. Technology has also made identity theft and impersonation easy," says Van Schalkwyk.

Another highlight of Day One will be a panel discussion which includes Shaun Strydom, who is the Founder Executive Head & Identity Futurologist at Contactable; Johan Moolman, who is the Group CEO of Secure Citizen; Martin Grunewald, who is the Chief Executive of Global Growth at Secure Citizen and Lohan Spies who is CEO of DIDX. The discussion will focus on self-sovereign identity and the role that it will play in the future.

A feature of Day Two will be a presentation by Craig Pedersen from TCG Forensics that will focus on digital identities and the unintended consequences of having them. "Again, tieing in with Day One's presentation, this will be important as we will focus on ways in which consumers and companies can secure their digital identity to make this kind of fraud harder to commit," says Van Schalkwyk.

The banking panel discussion on Day Two will focus on how SAFPS members ensure that they handle internal fraud when the external risk environment evolves. The discussion will include insights from Kevin Hogan, Head of Fraud Risk at Investec, Louis Hennings, Head of Integrated Financial Crime Risk Management at Nedbank, and Ulrich Janse Van Rensburg, Chief Fraud Strategist of the Absa Group.

Mark Courtney, the Chief Product Officer of UK-based fraud prevention service Cifas, will be addressing the conference on fraud and identity theft. 

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