As many consumers battle under the continuing onslaught of increasing costs, criminals are having a field day with scams. From SMS scams to dodgy stokvels and identity theft, it is easy to imagine how someone under financial pressure could be tempted.

Consumers with debt have borne the brunt of 10 consecutive interest rate hikes since November 2021, adding up to a cumulative 4.75% increase. According to Farzana Botha, a segment manager at Sanlam Risk and Savings, consumers repaying a R2-million home loan at the prime lending rate would have been paying R15,300 in November 2021, and would now be paying about R20,900.

“That’s a cumulative R5,600 increase in monthly repayments,” she says.

With debt repayments increasing on that scale across the board, it is small wonder that consumers are looking around for ways to grow their money. 

Phiko Peter, client relationship manager from Allan Gray, says the cost-of-living crisis, with the human need for quick results, makes a fertile hunting ground for crafty criminals.

“These factors make us even more susceptible to fraudulent “special offers” and get-rich-quick schemes. On top of this, technology has made instant investing more accessible. Unfortunately, fraudsters are giving old-fashioned scams a digital makeover and using online channels to fleece their victims,” he says.

Tshepo Moloi, the founder of Stokfella, says fraudulent savings schemes masquerading as authentic stokvel-like entities continue to emerge, each promising life-changing financial gain.

“The most recent incident involves United African Stokvel (UAS), a distressing example of how our people are exploited and their hopes for financial security and a better life taken advantage of, only to end up more financially vulnerable than before.

“Sadly, this is not the first time and unless we take action, it certainly won’t be the last. The frequency and magnitude of these financial debacles are escalating, leaving many questioning the integrity of stokvels,” he says.

Moloi says it is important to distinguish between the concept of stokvels and the lack of proactive oversight that has allowed these fraudulent schemes to flourish.

In the banking industry, FNB has identified that some consumers in recent cases received SMSes claiming that their bank required them to urgently register with Fica by clicking on a link that took them to the fraudster’s platform, where their information was then compromised.

The technique now includes attempting to entice the user to divulge both their card information and the one-time password which is subsequently used to complete successful transactions using smart devices.

“A good rule of thumb to remember is that credible financial institutions will never ask you to click on links. More importantly, if there is any message that a consumer suspects may be important, contact the relevant institution, but get their contact details directly from their platform so that you’re not redirected to the fraudster’s ‘help line’.

“With cybercriminals becoming more sophisticated, consumers must remain vigilant and take proactive measures to protect themselves,” cautions Trish Ramdhani, head of fraud at FNB Card.

FNB, Sanlam and Allan Gray offered the following cautionary tips on how to spot a scam:

If the returns are too good to be true, it is very likely a scam or illegal. It’s not enough to wait and see if someone else gets burnt. Very often in a Ponzi scam, the first investors will get paid out, until it becomes unsustainable.

The explanation of how returns are generated should be clear and understandable. If you don’t understand how an investment product generates its returns, or there are only vague references to underlying assets, you should be cautious.

An investment that relies on constantly recruiting new members. This is a huge red flag that you are likely dealing with a pyramid scheme. Be wary of tiered investments that classify investors or have multiple levels such as bronze, silver, gold, platinum and diamond.

Question unusual requests. If you get requests to receive money from unfamiliar sources or transfer funds to accounts unknown to you, be suspicious. Your bank account should only be used for activities you can vouch for.

Protect your personal information. Be protective of your personal information and avoid using third-party devices to store credentials such as usernames and passwords. Equally, be mindful of the type of information you share on social media platforms.

Check for accreditation. You can check if a person or company is registered to provide financial services via the Financial Sector Conduct Authority website. You can do an online search here for a licensed financial services provider. If the investment is not registered with a mainstream financial body, like the FSCA, it is not regulated. You should also contact financial bodies to verify the registration of any financial entity that is relatively new or not well-established.

References and checks. A vague reference to experience is not sufficient. Look for previous company experience that you can independently verify.

Special offers – limited time. Be suspicious of offers that have an urgent timeframe. Fraudsters want to create a sense of urgency to limit the amount of time you spend researching and thinking about the potential investment. Anything sold as a “once-in-a-lifetime opportunity” should be avoided.

Solid track record. Although past performance doesn’t guarantee future returns, you should consider financial service providers with decent track records. Most scams will promise great returns, without a solid track record to back them up. Look for investors or performance reports that are independent of the person making investment promises. DM