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,” says Manie van Schalkwyk, the chief executive of the Southern African Fraud Prevention Service (SAFPS).
The SAFPS is a non-profit organisation that aims to improve vigilance with regard to fraud, financial crime, and identity theft by educating businesses and consumers and assisting them in protecting themselves.
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 point out a 32% increase in the number of fraud incidents reported to the SAFPS in 2023, with a 62% increase in fraud listings.
“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.
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.
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. Although this may seem an innocent crime, research from Cifas in the United Kingdom points out that money muling funds activities such as drug and human trafficking and terrorist activities.
Van Schalkwyk says 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 10 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,” he says.
Fraudsters target insurance companies
According to the 2024 fraud statistics, victims of impersonation increased by 54% in the past year.
Dr Jerry Chetty, the head of business integrity at Santam, says the short-term insurer has seen the impact of identity theft being used in scams coming through in its investigation of fraud cases. He says a concerning trend involves fraudsters using social engineering to target insurance companies and obtain policyholder information.
Social engineering is based on psychological manipulation and deceit to get the victim to reveal confidential personal information.
“The fraudster poses as a client or broker to acquire personal information. We have identified persons of interest, and we are working with law enforcement to apprehend these individuals,” says Chetty.
He cautions that fraudsters can create synthetic identities by combining genuine personal information with fake or false information. Advancements in technology and increasing data breaches have also played a role in the creation of synthetic identities.
“Fraudsters are early adopters of technology and are effectively using tech as a tool to commit various forms of fraud scams. Case in point was an incident in which a staff member in finance at a multinational company was deceived into paying over R480 million to fraudsters due to a deep fake of the CFO,” he says.
Read: Corporate loses R483 million in ‘deepfake’ conference call scam
Chetty adds that identity theft cases unfortunately take time to detect.
“And at this stage, the victim has already suffered damage and it becomes a lengthy process for the victim to rectify the situation. This incident underscores the urgency to stay informed and be vigilant.”
Guard your personal information
Personal information such as your identity number, bank account details, contact numbers, address details, retail account details, are the primary catalyst for every fraud scam.
“In the digital world that we live in, where information is freely shared in public platforms, it is important to take caution not to overshare,” says Chetty.
He adds that personal information has become more accessible via the dark web due to the increasing number of data breaches in recent times.
“Since some of this personal information has limited use for fraudsters, they are always looking for opportunities to enhance and enrich these data sets to enable them to successfully perpetrate their fraud scams which ranges from vehicle financing fraud, investment scams, opening false retail accounts and so forth,” he says.
Protective registration
Because of the risks people face, South Africans are increasingly turning towards the SAFPS’s protective registration to give them an extra layer of protection.
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.
Van Schalkwyk says that the protective registration stats increased eight times last year.
“And that is because of data breaches. Savings reported by members increased by 86%. And we saved the industry more than R4.4 billion rand last year,” he says.
To register, visit www.safps.org.za and click on the fraud prevention tab. Van Schalkwyk advises to use your smartphone for best results.
“Once you have uploaded key pieces of information, you will add another layer of protection against potential ID fraud,” he says.
Santam shares the following precautions consumers can take to protect their personal information:
- Always verify and authenticate any request for information, no matter how genuine it seems at first glance. This may mean that you must call the insurance company or your broker directly to verify the request. Remember the psychological manipulation effect – fraudsters make you feel important and respected to gain your trust.
- Never share identifiable information, policy numbers, and claim numbers with strangers.
- Take extra caution when storing or disposing of insurance documents.
- Be cautious when clicking on links.
