Fraudsters are tricking consumers into signing up for funeral policies under the guise that they are applying for a food voucher, or entering a competition, or merely obtaining a “no-obligation” quotation, the FAIS Ombud has warned.
Funeral policies ensure that families do not have to worry about the costs of a funeral, as the policy will pay out a lump sum when a life assured passes away so that he or she can be buried with dignity. The nature of funeral policies, where providers do not conduct underwriting, does, however, make them prone to fraudulent transactions.
The FAIS Ombud’s latest newsletter detailed the strategies fraudsters are using to snare unsuspecting people.
One such involves a consumer being asked to complete an application for a food voucher, or to enter a competition, or to obtain a “no-obligation” quotation. The encounter usually takes place in a public location, such as a shopping centre.
The consumer, who is caught off-guard, is asked to provide personal information, which is used to complete a funeral policy application form.
In the case of the no-obligation quote scam, assurances are provided that a policy will not be issued without the client first receiving a phone call from the product provider to confirm the application.
The consumer is told to confirm an SMS that is sent to their cellphone, “to verify their account details”. Unknowingly, they are consenting to the last step in a DebiCheck process that allows a debit order to collect premiums from their bank accounts.
The insured person of the fraudulent policy is usually the unsuspecting consumer, and the beneficiary (or beneficiaries) is unknown to the individual. Think Showmax’s true-crime documentary Rosemary’s Hitlist.
“Importantly, the targeted individuals are mostly unemployed lay persons who are unable to comprehend the seriousness of the encounter and the subsequent SMS link which is sent to authorise the debit order,” the Ombud says.
What the scammed individual eventually realises the fraud and tries to cancel the policy, the chance for redress is small.
The client is told that an application form was completed, and that authority was provided to debit the bank account. Therefore, there is no valid basis for the fraudulent claims or for a refund of the deducted premiums.
Another scenario involves fraudsters accessing the PERSAL system, a human resource and payroll system for central government departments, provincial administrations, the South African Police Service, education, and correctional services.
Policies are provided without the knowledge and consent of the individual, and deductions are made directly from the individual’s salary slip, only to be discovered months or years later.
How to protect yourself
The FAIS Ombud has the following advice to avoid being scammed:
- Exercise caution. Be cautious of individuals who approach you in malls or other public settings, making grand promises of competitions, offering vouchers, or providing quotations for financial products.
- Guard your personal data. To enter a competition, you should not have to provide your identity number or any other personal information. Likewise, you do not have to provide an identity number or banking details for someone to generate a quotation in respect of a funeral policy or any other financial product.
- Stay alert to SMS verifications. Do not acknowledge an SMS that is sent to you under the pretences of confirming the authenticity of your banking details. Not only are banking details not required in such circumstances, but by acknowledging such an SMS you are providing the service with the authority to deduct premiums from your account.
- Scrutinise documents. Make sure you are 100% certain as to why you have to sign a document, the nature of the document, and the implications of signing it. Do not sign the document if you have any reservations.
- Regular monitoring. Make it a habit of checking your salary slip and your bank statements to identify any deductions of which you are not aware. The earlier you identify any fraudulent deductions, the sooner you can address the situation and limit any potential financial loss.
