Fraud Awareness: Essential Tips to Safeguard Yourself from Financial Scams

Many cash-strapped South Africans are turning to credit to make ends meet. Unfortunately, fraudsters are also looking to cash in on the increasing demand for credit and there is little they won’t do to take advantage of vulnerable victims. The solution is to take both proactive and reactive measures to outsmart swindlers and protect your valuable information and hard-earned money.

The latest crime statistics from the South African Banking Risk Information Centre reveal a highly complex financial fraud landscape. Criminals are becoming increasingly sophisticated in their attacks. While card fraud saw an encouraging 18.4% decrease overall, digital banking fraud saw an alarming 36% surge, with financial losses per incident increasing by 9%.

According to Leon Jacobs, Chief Information Officer at RCS, this 'reflects how financial fraud has changed with the move towards digital transacting. As a retail consumer finance provider, we’ve put measures in place to protect customers from falling prey to fraudulent tactics.'

In addition to this, we have ramped up our efforts to empower South Africans with the knowledge they need to protect themselves both in terms of their cards and passwords, as well as their online behaviour. Our security efforts plus greater awareness from customers results in an airtight system that can stop fraudsters in their tracks.”

An important part of making credit work for you involves getting smart about financial crime. This involves taking a few simple steps that can make a big difference in terms of preventing unnecessary financial losses, hassle and emotional distress.

Focusing specifically on what to do to avoid being defrauded when using credit or applying for a loan, Jacobs suggests the following safeguards:

Stay in the safe zone when applying for a loan

The latest loan scam involves inviting you to apply for a loan and asking for an ‘advance fee.’ The fraudster takes your money, and you never receive the loan amount. To avoid this scam, you can take the following steps:

Do these 3 important checks:

1. The domain: The email domain should be from the company making the offer. Avoid any unsolicited offers from a Gmail, Yahoo or Outlook address.
2. The number: If the offer reaches you via SMS or a call from a personal number rather than a call centre, it is most likely fake.
3. The language: Look out for spelling errors and bad grammar, even if the offer contains the company’s logo and looks otherwise legitimate.

Beware of these 3 red flags:

1. An undue sense of urgency: Fraudsters will often try to pressurise or scare you into making a decision without really thinking it through properly.
2. An upfront fee to secure the loan: Legitimate credit providers will never ask for an advance fee.
3. Lack of background checks: Legitimate credit providers will always comply with the National Credit Act and do the relevant checks before approving any loan – this is for your safety as well as theirs.

Credit fraud prevention tips:

With more South Africans transacting via credit, fraudsters are on high alert to catch unsuspecting victims. Some of the most common cyber-attacks involving credit are ‘phishing’ (via e-mail) and ‘smishing’ (via SMS). Both are fraudulent offers where a fraudster contacts you to try to trick you into sharing your confidential or personal information, so that they can access your account.

When using any form of credit, keep this checklist handy:

• Always double check your transactions by making a habit of reviewing your monthly statements against your slips
• Only shop on secure online websites (look out for the lock icon in the browser bar) and always ensure that you make transactions using a safe and secure Wi-Fi network. Conducting transactions on open, public Wi-Fi networks should be avoided.
• Never disclose your PIN, confidential information or OTP to anyone over the phone or via email

Report these 3 things immediately:

1. If your card is lost or stolen
2. If you receive a transaction notification via SMS without having transacted
3. If you receive an OTP on your phone without having transacted

Spotting credit scams can be tricky, especially when you’re caught off-guard. However, as Jacobs advises, the general rule of thumb is that if something sounds too good to be true, it probably is. He concludes, 'Stay sharp, stay informed, and make smart decisions – vigilance is your best defense against financial fraud.'

MORE ARTICLES ABOUT