Discover the most common scams targeting South Africans at the start of the year, and learn how to protect yourself and your finances from fraudsters. File photo.
Revitalised from their end-of-year vacation, South Africans typically tackle the new year with gusto and renewed vigour. It is also a time when students who matriculated the year before, start the next phase of their journey as they enter into universities and colleges eager to further their education.
"While there is plenty of excitement associated with the new year, it can be a costly period for most South Africans as they need to make initial payments regarding school and university registration, textbooks, and securing accommodation for children entering into the university," says Elmi Kemp, communications lead at the SAFPS. She adds that because of this, the beginning of the year is a period where scammers and fraudsters are very active.
Below are some of the most prominent scams that South Africans need to be aware of.
Loan scams
A loan scam is a loan that is offered under false pretences. Scammers seek to hook their targets and reel them in by making big promises.
"Scammers will deceive you into paying them money in the hopes of securing a bigger loan, they could ask for things like an administration fee, processing fee, or insurance on the loan. Once payment is made, the scammers will disappear. They also use the process to gain access to your personal data (via phishing), which they will use to commit application fraud, open bank or store accounts, and even take out loans in your name," warns Kemp.
Warning signs to look out for:
Guaranteed approval: You are promised large loans, irrespective of your credit record or debt consolidation, to help reduce your financial stress.
Pre-payment of administrative costs: You are asked to pay a fee for administration or processing purposes. They ask for the upfront payment via an untraceable payment method.
Time constraints: There is a sense of urgency to respond as the offer will expire.
Special (Exclusive) offers: You may be presented with a limited New Year deal/ offer from an unfamiliar brand.
Impersonation: The person claims to be from a well-known organisation, but the email address and information do not link to that organisation.
Interrogation: They ask for personal, sensitive, or irrelevant information upfront to phish as many details about you and your lifestyle as possible.
"Vigilance is key. Be alert to what is being presented to you. Remember, if it looks too good to be true, it probably is," says Kemp.
Bursary & scholarship scams
Education is very important to South Africans, and many people make financial sacrifices for their children to receive the best education possible. However, education, especially when considering the private education route, has a significant cost associated with it.
"These factors make bursaries and scholarships attractive options for many South Africans," says Nazia Karrim, head of product development at the SAFPS. "The temptation of these options may cause potential victims to ignore the fact that they are being presented with a scam."
As with a loan scam, scammers will typically ask for an advance fee, which they claim will cover the facilitation of the application. They either disappear once the money is paid over, or they will ask for more money to release the documents that have been successfully processed. "Scammers have been known to string their victims on for a significant period before a line is drawn in the sand. By then, the victims have more than likely lost quite a bit of money," warns Karrim, who adds that the potential of personal information being compromised by phishing is also present in these scams.
Warning signs to look out for:
Qualifying criteria: There are no minimum requirements, for example, proof of your academic performance or that you are, in fact, in need of financial support.
Pre-payment of administrative costs: They ask you to pay a fee to process the application.
False notifications: If you get notified about a bursary or scholarship you did not apply for.
Application support: They offer to complete your application for you, assist with late applications, or help you structure your applications for an increased likelihood of acceptance.
Unknown sponsor/ Bursar: You cannot find anything about this online or on any official website.
Shopping deals that are too good to be true
Registration fees are not the only financial burden associated with the beginning of the year. Parents may need to buy laptops, textbooks, and school uniforms.
"Shopping for brand new items has become expensive and is often out of reach for many. For textbooks and technology items such as laptops and tablets, many South Africans turn to social media marketplaces to capitalise on used items offered at a reduced cost. If textbooks are in good condition and technology is refurbished, they are functional at a reduced price. However, social media and online markets present opportunistic platforms for scammers," says Karrim.
All of the above tactics apply to social media and online marketplaces. However, scams are carried out with a great deal of social engineering. Social engineering is the practice whereby criminals exploit a person’s trust to get access to confidential information or money.
It is about using your behaviour and what you share with the world against you. A common tactic by scammers is to create a fake profile and then befriend potential victims, taking great interest in their social lives. "People are more likely to trust a friend over a stranger. Social media could become a dangerous platform for consumers if it's not used with care, giving scammers access to information about you, your family, and your social habits and lifestyle," warns Karrim.
Warning signs:
Unbelievable offers: Deals that are too good to be true (prices are surprisingly low and free offers) pop up on your social media as ads. They are for a limited time only or while stocks last!
Redirect to fake sites: They click through to sites you do not know or that resemble a legitimate website (these are called spoofed sites) - be sure to check the website links or URLs. Verify the site - check if this is a spoofed website using the SAFPS’ Yima website scanner via the Yima website. The scanner will let you know if this is a legitimate site and safe to use.
Phish payment details: Payment is done via untrusted/ untraceable methods or simulates a trusted payment service provider's process. Your card details and card verification value (CVV) details are then phished and sold, or unauthorised transactions may be processed from your account immediately.
Inaccuracies: Spelling and grammatical errors in ads and website links, as well as contradictions in contact or location details (invoice/website/advert) or excuses that international call centres are used for customer support.
Scams prevention toolbox
How do we combat this? Karrim points out that the SAFPS launched Yima in response to the growing need to provide consumers with tools to stand up against scammers.
"The Yima website hosts a scams prevention toolbox for South Africans to report scams and scan any website for vulnerabilities related to scams. Knowledge is power and consumers can find helpful tips and articles to expand their knowledge on how to identify a scam. These are just some exciting elements South Africans can access through the site," says Karrim.
The website's main element is the ability to report a scam incident or any suspicious activity to the SAFPS using the Yima website. Suspicious activity can be reported, including a fake or suspect-looking online shopping website or portal and instances where the user has received phoney banking information. Intelligence gathered from these reports will be collated and shared with law enforcement for investigations. Users can also access a scam hotline (083 123 7226) to report a fraud incident directly to their banks, retailers, insurance companies, and the South African Police Service via a single number.
“Additionally, consumers will have access to the products and services offered by the SAFPS at no cost. Protective Registration and Fraud Victim Registration are two important products that protect victims of impersonation scams. Combined with Yima, the SAFPS has created a bouquet of products that takes the fight to fraudsters and scammers. As the custodians of fraud prevention in Southern Africa, we are making a difference to consumers in their fight against scams and fraud,” says Karrim.
PERSONAL FINANCE