Despite constant warnings from financial firms and regulators, thousands fall victim to investment scams daily, losing their savings. In the first two months of 2025 alone, the FSCA has issued 14 public alerts about high-risk schemes.
These scams take various forms, from impersonation and false claims of authorisation to the misuse of social media platforms to solicit investments.
Most of these scams follow a familiar pattern – offering guaranteed, high-profit investments while masquerading as established businesses or professionals. Whether through impersonation, unauthorised financial services, or social media-driven fraud, the goal is the same: to deceive and exploit unsuspecting investors.
On the JSE Investor Avenue Podcast, radio host Gugulethu Mfuphi – who also anchors the business show KayaBiz on Kaya 959 – sat down with the FSCA’s head of communications and marketing, Tembisa Marele (pictured) , to unpack the latest investment scams.
Marele highlighted four key tactics fraudsters are using, the three distinct groups of people who are drawn into these scams, the warning signs to watch for, and how investors can stay ahead of scammers.
The rise of the deepfake scam
Marele warns that investment scams often “happen in the shadows”, thriving in community spaces such as schools and places of worship until victims have already lost their money. By the time the authorities step in, little can be done to recoup the losses.
Social media has supercharged these schemes, with fraudsters using AI-driven tools to deceive investors at scale. The FSCA’s latest Regulatory Actions Report highlights the rise of deepfake scams, where AI-generated videos, images, and audio impersonate public figures to promote fraudulent investments.
Marele illustrates the danger: “So think about this. I listen to Gugu every day on her show, and then I’m scrolling just before bed[time], and I look at a video, and here she is telling me that she’s invested in some, you know, cattle, or whatever scheme that is running at the time. And I’m thinking, I trust her. She gives me all of my financial news on her daily show. Of course, I’m going to put my money there. If she says this is good, I’m buying in.”
The reality? Gugu never made the video and knows nothing about the scheme – yet people invest, believing it’s real. “That is the deepfake scam, and it’s really becoming prominent.”
Fraudsters also exploit personal connections, using platforms such as Telegram and WhatsApp to reach potential victims.
Marele emphasises the power of social media in spreading these schemes: “People are using their friends, their families, teachers at school, familiar people at church, or whatever places of worship. And so that is how these [schemes] grow in popularity. And as these grow, people lose money.”
Copy trading
She highlights a rising trend of individuals offering to assist clients with trading on high-risk derivative platforms, mostly in the forex space. Copy trading – where investors mirror the trades of experienced traders – is a regulated financial service requiring FSP authorisation.
These individuals help clients to open trading accounts locally and internationally, either trading on their behalf or allowing them to replicate trades. Often, clients receive misleading statements reflecting unrealistic gains. The FSCA warns that success rates on these platforms are low, and without strong risk management, these products are unsuitable for most investors.
“Somebody comes to you, and they say, this is really complex, but you don’t have to go and analyse the market for yourself. You don’t have to know all of the nuances of this market. You can just copy my trade. I’m an experienced trader. Mirror what I do, and you’ll be fine.”
She warns that many investors are deceived by fabricated profits. “Every month, people get their statements. Things are looking great. Meanwhile, back at the ranch, there is absolutely nothing happening, but your money [is] being taken.”
The FSCA is keeping a close watch. “We’ve dealt with some very big cases, where people have lost millions per person, and this is hard-earned money. At times, people are withdrawing from long-term savings and investments.”
Her advice? Think before you invest. “If somebody is withdrawing all of their money because here’s this great opportunity, there is no recourse if that entity is not registered.”
Investment in livestock
The FSCA has flagged a rising trend of entities soliciting investments in agricultural products – such as livestock and harvests – by promising investors a share in the profits. A common scheme invites individuals to invest in a cow, for example, assuring investors returns from its sale or offspring. However, the regulator considers this deposit-taking, a regulated financial activity.
These schemes have also become a hotspot for fraud. Investors are enticed with promises of high returns linked to agricultural sales – whether cows, fish, or abalone – while scammers use fake photos and fabricated updates to sustain the illusion.
Marele urges caution, warning that even well-meaning groups can unknowingly break the law. “Anything that takes money from a member of the public is deposit-taking, and it must be regulated. So, if you are going to say, I’m going to buy this plot of land, and people are going to come and put money in – we’ll put 100 pigs in here, and then each one contributes to ensure they get a share of the proceeds – make sure you are authorised and licensed to do so.”
She notes that many are unaware they are operating illegally. “You find people that didn’t even know this was not legal… If you’re going to take money from the public, do your research, dot your i’s and cross your t’s.”
Impersonation
Impersonation scams have become a real headache for the finance industry, with fraudsters posing as legitimate financial services providers to deceive investors. Even regulators aren’t immune – scammers have been caught impersonating FSCA officials, claiming to assist with withdrawals or recovering lost funds.
Marele highlights the growing sophistication of these schemes, where fraudsters forge official-looking emails and letters, even impersonating high-profile figures like such as the FSCA’s commissioner or the chief executive of the JSE. “And it looks legit, but it’s not,” she warns.
She urges vigilance. If you get it, check. Rather ask the person referenced.
“‘This looks like you. Is it you? Did you say this?’ Because if I didn’t, then I’ll tell you. But if you don’t ask, and then afterward, you say, ‘Here’s your letter,’ and only then I say to you, ‘Sorry’ – there’s very little that can be done at that point.”
Her key message: “I know times are tough. I know that we’re all struggling in some way, and I know that it is good to invest, and I encourage everybody to invest, but find a legitimate way of investing… Ask the questions. Get your information, do your homework, because you’ve earned this money with your blood, sweat, and tears.”
The psychology behind investment scams: who falls victim?
Investment scams don’t have a one-size-fits-all target. However, Marele says that, according to observations over time, the FSCA has identified three distinct categories of people.
The first group consists of those in financial distress. “They’re desperate for money. Times are tight. The economy is hard. We’re hard-pressed on all ends,” she explains.
When a trusted friend or acquaintance claims to have made easy money through an investment, it’s tempting to believe it’s a way out. The combination of financial strain and trust in the source makes them particularly vulnerable.
The second group knows exactly what they’re doing. These individuals understand the risks, recognise the unrealistic returns, and are fully aware that the scheme will collapse.
“But guess what? If I go in early, I can catch what I need, step out before the thing falls over,” Marele says.
Motivated purely by greed, they jump from one scheme to the next, often recruiting others to increase their own profits.
“They are very dangerous,” she warns, as they fuel the cycle of deception.
The third group consists of the undiscerning – people who aren’t necessarily greedy or in financial trouble but see an easy opportunity to make extra money.
“If there’s an opportunity, I’m not going to spend too much time reading about it. I’m just going to throw whatever I’ve got in there,” she explains.
Only when the scheme unravels do they realise the company wasn’t registered, and they’ve been caught in a scam.
Ask the right questions
Many people assume that only the financially uneducated fall victim to investment scams. But according to Marele, this is far from the truth.
“Granted, there is a fair number of people who get caught up in that way, but this cuts across everybody. Everybody is susceptible. Everybody’s a potential victim. Whether you make R10, or R10 million, or R10 billion a day or a month, you are susceptible.”
To help investors protect themselves, she urges them to use the FSCA’s website (fsca.co.za), where a dedicated section for financial consumers offers resources on safe investing.
She highlights key red flags to watch for:
- If it sounds too good to be true, it probably isn’t. If a bank investment offers 6% to 8% a year and someone claims they can get you 30% or 40% a month, alarm bells ought to go off. It may sound appealing, but it’s not realistic. Ask questions. Request material. Read everything, because scammers often avoid providing documentation.
- High-pressure tactics. If they push you to invest immediately or claim you’ll “miss a once-in-a-lifetime opportunity”, something is off.”
- Complexity without transparency. If you don’t understand the investment, the asset class, or how returns are generated, be cautious. If no one takes the time to explain it properly, it’s probably not for you.
Before investing, Marele advises asking two critical questions:
- Are you registered? If someone offers you a financial product, ask for their FSP licence number. Then verify it on the FSCA website. Don’t just take their word for it – double-check the details.
- What are you licensed to do? Some scammers misuse legitimate licenses. They may be licensed to sell funeral insurance but use that registration to promote investments they aren’t authorised to offer. Don’t stop at asking if they’re licensed; ask what they are licensed to do.
Marele urges everyone to report suspected scams as early as possible – ideally before any money is lost. Once the FSCA becomes aware of a potential scheme, it can launch an investigation.
“When it comes to fighting scams, no one entity, no one organisation, can do it alone. It is a collaborative effort. We all have to pull together, because this is our problem collectively as society,” says Marele.
