SOUTH AFRICA’S CYBERCRIME CONUNDRUM: COMMON TYPES OF FINTECH FRAUD ON THE RISE

South Africa’s FinTech industry has long been plagued by the threat of financial fraud. With a robust presence of financial institutions and a lack of effective cybercrime laws, the country has become a rich target for fraudsters. The recent data leak at Experian South Africa exposed the sensitive information of 24 million citizens and 800,000 businesses, leaving them vulnerable to potential fraud.

Digital Banking Fraud: A Growing Concern

According to a FinTech News report in 2018, digital banking fraud reached an all-time high in South Africa, with 22% of users falling victim to scams in just one year - a 10% increase from three years prior. The country’s ambiguous approach to prosecuting fraudsters has put its FinTech industry at risk.

LOAN SCAMS: THE MOST COMMON TYPE OF FINTECH FRAUD IN SOUTH AFRICA

Loan scams are the most prevalent type of FinTech fraud affecting South African citizens. These scams prey on individuals in need of financial assistance, often promising low-interest loans or other enticing offers that seem too good to be true.

Characteristics of Loan Scams

• Upfront Fees: Fraudsters offer a loan with favorable terms but ask for payment before disbursing the funds.
• Access to Bank Account Information: Scammers claim it’s necessary for loan approval, then use this information to steal from the victim’s account or engage in identity theft.

WARNING SIGNS OF LOAN FRAUD

To defend against loan fraud, South Africans should be aware of the following red flags:

• Loan offers made via phone calls are illegal and a warning sign.
• Requests for payment via wire transfer are suspicious, as it allows for anonymous transactions.
• Legitimate lenders will always want to check credit history before offering a loan. If this step is skipped or downplayed, it’s a bad sign.
• A lack of professionalism in communication, such as poorly written emails or unresponsive customer service, indicates a potential scam.

DEFENDING AGAINST LOAN FRAUD

The best defense against loan fraud is being informed and recognizing these warning signs. However, even with precautions, individuals and businesses can still fall victim to financial scams. In such cases, utilizing professional defensive tactics to protect data, assets, and customers is essential.

Fraud.net’s security platform offers advanced identity fraud protection and defense against loan fraud. South Africa’s businesses can rely on their expertise to safeguard against financial threats. To learn more about how Fraud.net can help defend your company, sign up for a free demo today.