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Data leaks cause SA’s impersonation fraud uptick

South Africa saw a spike in impersonation crimes over the past year, mainly driven by data leaks and compromised personal data.

This is based on the latest fraud statistics compiled bythe Southern African Fraud Prevention Services (SAFPS), a non-profit fraud-preventing organisation.

The 2023 statistics released yesterday detail the fraud incidents from April 2022 until the end of April 2023.

The SAFPS reveals that impersonation fraud, whereby fraudsters assume the identity of a victim, increased by 356% during the period under review.

“South Africa is investing heavily in digitisation to catch up with the rest of the world. However, while digitisation will revolutionise the South African economy in the future, it has risks,” says SAFPS CEO Manie van Schalkwyk.

“According to a 2021 Interpol report, South Africa tops Africa in cyber threats and is third in the world, with 230 million threats detected in 2021. Of these, 219 million threats were related to e-mails.

“There has been a marked increase in the use of forged documentation, which has increased by 62% over the same period in 2022. Other forged documentation instances include fake driver's licences, which can be used as a form of identification when applying for credit. This is a risk that the SAFPS is keeping an eye on in the future.”

South African organisations have increasingly suffered security compromises, with the Information Regulator telling ITWeb it has received 1 021 data breach notifications, to date.

Dis-Chem, TransUnion and Experian are some of the entities that have been attacked. More recently, the Development Bank of Southern Africa, First National Bank, Western Cape Provincial Parliament and Dimension Data are among those that have experienced breaches.

The CSIR estimates the impact of cyber crime on the South African economy to be at R2.2 billion per annum, amid the country’s worsening data security and privacy environment.

According to the SAFPS statistics, Gauteng is the biggest hotbed of fraud, with 66% of the fraud incidents reported to the organisation coming from the country’s economic hub.

It is followed by KwaZulu-Natal, which made up 17% of the incidents reported to the SAFPS, and the Western Cape, which made up 8% of the incidents reported to the SAFPS.

“There is a significant increase in the fraud landscape,” notes Van Schalkwyk. “We cannot stand by and continue to take a reactive stance when it comes to combatting fraud.”

The SAFPS CEO notes the growth of social media has also become a major hotbed of fraud, with many issuing serious warnings when conducting retail business with third-party sellers, as is the case with platforms such as Facebook Marketplace.

“While this is a challenge, it cannot be ignored in the future, as these platforms will generate $1 trillion of income over the next five years. Realising the importance of online marketplaces, and the threat of fraud, the SAFPS has through its subsidiary company, Secure Citizen, developed the functionality for individuals to validate other sellers when performing a transaction, thereby minimising the threat of fraud.”

Overall, the SAFPS findings show the South African fraud landscape has increased significantly over the past three years, with impersonation fraud, money-muling (a type of money laundering) and forged documentation being the most significant.

This year alone, there has been a dramatic increase in money-muling and forged documents.

According to the SAFPS, money-muling incidents increased by 62%, compared to 35% the year before.

One of the most common forms of money-muling is when a victim is approached by someone claiming they need to send money to a family member in another country and they need a bank account to perform this transaction. Wanting to help, many people willingly let these fraudsters use their bank accounts.

“The repercussions of being a money-mule are significant. The guilty party will be listed with the SAFPS and the result is that the individual could struggle to get access to finance for a period of 10 years. It is one of the biggest issues the SAFPS is currently facing, and it is important for the public to know about the seriousness of this crime,” Van Schalkwyk states.

He urges consumers to educate themselves about fraud and the current landscape, saying: “Opportunistic criminals are not conducting fraud. Instead, fraud is being conducted by well-run syndicates that are up-to-date with the current tactics being used globally.”

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