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While businesses throughout South Africa shift more of their operations online, in a bid to become more competitive in response to the challenges of the COVID pandemic and subsequent lockdowns, it appears that fraudsters and scammers are embracing this ‘new normal’ by finding ways to exploit opportunities through on-line transactions.

Our data partner TransUnion, in their recently published playbook “Digital Fraud Strategies: What to expect and how to prepare” share insights into industry segments that have accelerated during the pandemic. Financial transactions through net banking, on-line medical transactions, on-line insurance and phishing and pharming have seen spikes of between 15% and 50% for the relevant sectors.

During lockdown, up to 1 in 4 South Africans surveyed confirmed they had experienced a COVID-19 related fraud scam, while 20% of them said they fell victim to it.

Growing Fraud Estimates

Regulatory DataCorp[1] estimate a more than 40% increase in cyber criminal activity for the two years following the Great Recession’s 2009 peak. Their findings estimate that;

  • Fraudsters take advantage of those in need of income and are more susceptible to internet and phone schemes
  • Corporate budget cuts can include security departments, leaving private data at greater risk of breach by cyber criminals
  • Skilled technology workers who lose their jobs may retaliate by perpetrating criminal acts against their former employer

A number of government departments have issued comm uniques warning suppliers and tender participants about fraudulent RFQs (request for quotations) in which suppliers have fallen victim and lost millions of Rands. A government gazette in September 2021 shared important information about the scam: “The scam involves the fraudsters using the letterhead of GPW to send out fake tender bids to companies and requests to supply equipment and goods. Although the contact person’s name on the letter may be of an existing official, the contact details on the letter are not the same as the Government Printing Works,” it said. “The banking details are in a private name and not a company name.”

Due to the accelerated adoption of digital technology and remote working, TransUnion’s playbook estimates that some of the top fraud risks that are anticipated include:

  • Synthetic identity fraud
  • Transaction payment fraud
  • First and third party fraud

In summarising their findings from data obtained from several financial crises, they propose fraud is increasing and employees are increasingly committing economic crime.

 The duration and extent of fraud can run over a considerable period of time, sometime many years. National Prosecuting Authority (NPA) regional spokesperson, Monica Nyuswa[2], said a former 62 year old SASSA employee, who had been bust for fraud lasting more than a decade, was convicted of fraud and uttering in the Middelburg Commercial Crimes Court recently.

Digital & Fraud Treatment Strategies

In dealing with the challenge of faceless contact in transactions and conducting business, organisations are expecting improvements in transaction experience by making them simple, automated, robust and complete. Organisations should adopt end-to-end point solutions for improved fraud prevention and consumer experiences.

In a fiercely competitive marketplace, reputation is everything, so protecting your organization from damaging impacts of fraud and corruption is imperative. We have developed a solution that customers have said accurately detects risks in employee lifestyle and financial behaviour to enable organisations to detect risk events ahead of time. The systems and data are intuitive to use and can be seamlessly and swiftly integrated into an organisations existing processes and reports. We have integrated bank account verification into our products so organisations need not be exposed to the types of fraudulent scams publicised by recent government gazetted warnings of new scams.

Corporate Insights Lifestyle Assessment solution uses big data analytics and automated insights to empower businesses to reliably, continually and discreetly monitor employees and vendors for early warning signs. That way you’re well-positioned to prevent potential threats by taking swift action — keeping your bottom line and ethical integrity intact. Read more here

[1] Source: Regulatory DataCorp “Technology, Cybercrime, and Recessions: An Untimely Trio”

[2] https://www.msn.com/en-za/news/other/sassa-official-bust-for-fraud-after-more-than-a-decade/ar-AAOfzGO?ocid=entnewsntp