Financial fraud: How to spot and avoid scams

You can also listen to this podcast on iono.fm here.

FIFI PETERS In today’s personal finance feature on the Market Update we are looking at financial fraud, which in a sense is when someone loses money as a result of criminal activity. I guess this week will be reminding us that April Fool’s Day may have come and gone, but we still need to remain on high alert so as not to be caught out by financial scams.

Claire Klassen is the consumer financial education specialist at Momentum Metropolitan. She joins us for more. Claire, thanks much for your time. Please talk to us about what you are seeing in your space right now as it pertains to financial fraud and the popular ways that people are being scammed.

CLAIRE KLASSEN: Thank you. First of all, good evening to your listeners, and it’s lovely to be talking to you again, Fifi.

We all see these messages come through from our banks, SMSes that say: ‘Please don’t share your PIN number with anyone. Don’t write down your password where it’s obvious.’ But the thing about human beings is that we are creatures of habit. One of the key points we need to remember is that we need to keep our personal information safe.

You’ve heard about the Protection of Personal Information [POPI] Act, right? The financial services industry – in fact anyone who keeps data, specifically, safe – is looking at things like cybercrime where, for example, institutions like TransUnion, are hacked and consumers fear the worst.

Our ID numbers are exposed; our personal banking information is exposed, things like that. What I’m really seeing is the trend in cybercrime. If you look at what cybercrime is, it is an attack from a hacker, something that we as consumers cannot prevent. But [how] we can prevent it is by keeping our personal information safe – like never storing your PIN number, your personal identification number for your banking card, on your phone. If you think about all the muggings that happen on street corners, as you are walking in Johannesburg they can steal your phone and access your banking information.

So please do not keep your PIN number on your cellphone, firstly.

Secondly on things like WhatsApp, Fifi, they attack people that are retired or at an age that isn’t really au fait with social media. So what we as consumers can do, if we have parents or grandparents who are using cellphones they’re not really used to, is to please update them on how they can be swindled on WhatsApp. There are things like ‘quick money’ you can make: ‘Invest R5 000 and you can get R20 000 next month.’ Those are really unrealistic. It’s taking place not only on cellphones, but also with a person sitting in front of you promising that you’re going to make easy money.

Those are the types of things. If it looks too good to be true it probably is, Fifi.

FIFI PETERS: I was going to ask you about who the main targets are right now. You did mention the elderly, how they are being scammed right now on WhatsApp. But what about young people? Are they [also] falling for some of these tricks?

CLAIRE KLASSEN: We think that younger people who use the internet regularly, social media regularly, don’t fall for scams.

But I think South Africans have the propensity not to save, not to put money away for a rainy day, and then think that we can make money overnight or very quickly. That grabs our attention, especially with the younger generation.

You can talk to them about advertisements that they see on a social media platform, where the person on the other side promises a high return if you simply follow an algorithm. How realistic is that, sitting behind your laptop?

This is what I’ve seen with the youth, Fifi, where when you ask them: ‘How do you make extra money?’ [they say] ‘I’m in forex’. And when you ask them what forex is, they tell you: ‘I sit behind my laptop and I follow an algorithm, and this is how I make money.’

Now, given that in the financial services industry things like cryptocurrency aren’t highly regulated at this stage, anybody can take you for a ride if they don’t have your best interest at heart.

So what I tell younger people is that yes, you can be duped. You think you’re an expert on all things social media, but I’m afraid you can also fall victim. And one of the key ways that you fall victim is thinking that you can make a 100% profit in a week. That is not realistic.

FIFI PETERS: No, certainly. It’s tax season right now, and a lot of people are completing some of their filings and the like. You say that you are also seeing some evidence of the cyber criminals trying to do their things in terms of tax filings. Just give us what we need to be on the lookout for there.

CLAIRE KLASSEN: Well, let’s say, for example, you submit your income tax return by auto assessment and you are expecting some sort of communication to come from Sars.

If the sender’s email address ends with, for example, returns@sars.co.za [beware]. You should make really sure that whenever you communicate with Sars, the link given ends in ‘gov.za’.

Those are the types of things where, a couple of weeks before [a related] article was released, people were being defrauded by types of emails going out to taxpayers saying: ‘We’ve received your assessment and you have a refund. Click on this link.’

When you click on that [fraudulent] link, it takes you to a separate page where you need to verify your banking details. That is how cyber criminals hide behind anonymity and can access your information.

If you go onto the Sars website itself, there’s actually a section where you can check the latest trends in defrauding South African taxpayers. These [include] the way you would receive an email with a link that takes you to a separate page that opens up.

What you can also look out for, Fifi, is when a website [address] or ‘URL’ does not have ‘https://’ as its prefix. It is probably a page that is designed specifically to [extract] your information.

We have busy lives, everybody wants to get through their day, and we don’t really read the top [URL/address] when you click on your browser.

So please be very, very careful. Do not enter a website that does not have the prefix ‘https:// and then ‘sars.gov.za’ – it is probably designed to get your information.

FIFI PETERS: Claire, thanks so much for those really helpful tips. Claire Klassen is a consumer financial education specialist at Momentum Metropolitan.