Financial Crime World

ALARMING TRENDS: Common Types of Financial Fraud on the Rise in South Africa

In 2021, a record number of complaints were received by the Ombudsman for Banking Services (OBS), with internet banking fraud topping the list. The OBS adjudicated a total of 10,330 complaints, a 7% increase from 2020.

Internet Banking Fraud on the Rise

Internet banking complaints accounted for 19% of all cases opened in 2021, an alarming 6% increase from 2020. This worrying trend goes against the progress made in 2020 where the number of internet fraud victims had dropped significantly to a record low of 13%.

Tips to Avoid Internet Banking Fraud

  • Protect your confidential banking information
  • Never accept help from strangers at the ATM

According to Reana Steyn, the ombud, most complaints could have been avoided if consumers were more sceptical of fraudsters posing as bank personnel.

OBS Findings and Awards

The OBS found in favour of banks in 73% of the matters resolved in 2021, with no legal or fair grounds to uphold the complaint against the bank in 5,846 cases. However, Steyn was pleased to have been able to help consumers who had legitimate and substantiable claims.

  • In 20.4% of matters adjudicated, the OBS concluded there was some wrongdoing on the banks’ part, with over R19 million awarded and offered because of the OBS’s direct intervention.
  • The OBS also provided information to complainants in 6.6% of cases where no award was made.

Steyn noted that individual increases should be seen in light of the overall increase in the number of complaints received by the OBS between 2020 and 2021. FNB saw a significant decrease in complaints, while Standard Bank, Capitec, ABSA, and Nedbank all experienced increases.

  • TymeBank, which was launched in 2019, saw a major increase in complaints in 2021, but this came off a very low base of only 24 cases in 2020.
  • Discovery Bank decreased by 26.7%.

Preventing Financial Fraud

Steyn urged consumers to become more involved in managing their accounts by constantly going through their account statements and engaging with their bank at the first sign of financial stress. By being more vigilant and proactive, consumers can avoid falling victim to common types of financial fraud.