The growth of Criminal Enterprise 4.0
The world is currently a very scary place. South Africa is facing massive levels of unemployment, and its citizens have been disrupted from their daily routines.
This has caused heightened levels of anxiety. With this anxiety comes hope that things will start to get back to normal or that there are companies who can offer relief for the risk that is faced in the market.
Criminals are aware of this anxiety and are looking to take advantage of the desperation that is starting to grow. The public needs to be aware of the following scams which are starting to become more prevalent.
Trends at SAFPS
Comparing Feb/May 2020 reported Fraud incidents with 2019 statistics from the same period:
- total fraud incidents fell by around 8%, with incidents in April falling sharply to half of the 12-month average; This is due to the fact that less credit was extended as a result of the lockdown, looking at the April/May period the fraud incidents dropped by 35% compared to the same time last year.
- Incidents of forged documents, which accounted for 38% of reported fraud incidents in 2019, almost halved, now accounting for only 22% of incidents;
- Impersonation saw a sharp increase in May after the signs of economic slowdown Misuse of bank/loan accounts rose from 2% of incidents to 23% of incidents.
The main trends in this category are:
- Interception of emails from contacts containing details which would then be changed
- Requesting admin fees be paid before a successful loan application or lottery winnings could be paid out.
- Requesting deposits before vehicles, animals or other goods be delivered
- Whilst overall fraud rates declined, Gauteng (previously accounting for 55% of all fraud incidents) jumped to 79%.
- The sharpest decline was in KZN which previously accounted for 37% of fraud incidents, now accounting for less than 12%
- We saw that the banking industry accounted for 52% of fraud incidents which is up from 32% in 2019 and actual numbers in the banking industry increased by 30%
- The unsecured lending industry saw their fraud incidents more than doubled, and accounting now for more than 15% of all fraud incidents.
“Although the number of fraud incidents were less than last year as a result of the restrictions in the country, we need to understand how the various categories of frauds have changed and how the different industries have been affected” said Manie van Schalkwyk, Executive Director of the Southern African Fraud Prevention Service (SAFPS).
Low hanging fruits
Criminals are frequently using SMS and WhatsApps go out and offer cheap loans to customers. Customers are then requested to pay an amount upfront to get the loan.
“This is totally not practice. If the consumer is receiving such an offer, you must know that fraudsters are targeting you. A number of major companies, such as Direct Axis, Bayport, Wonga and Bidvest Bank have fallen prey to this in the past few months. The practice is damaging the organisation’s brand as consumers are under the impression that the real organisation is behind these actions, said Van Schalkwyk.
A recent survey, Fraud in the wake of COVID-19: Benchmarking Report, was done by the Association of Certified Fraud Examiners (ACFE) and showed some worrying statistics
The report pointed out that, as of May 2020, 68% of survey respondents had already experienced or observed an increase in fraud levels, with one-quarter saying the observed increase has been significant.
Looking forward, anti-fraud professionals expect an even greater shift in the overall fraud level. Nearly all of our survey respondents (93%) said they anticipate an increase in fraud in the next year (i.e., through May 2021), with more than half of respondents predicting a significant increase.
The report adds that the threat that has risen the most during the COVID-19 pandemic is cyber fraud, which includes schemes such as business email compromise, hacking, ransomware, and malware. The majority of survey respondents (81%) have already seen an increase in these schemes, and 93% expect them to increase over the next 12 months.
Fraudulent death claims
“There is a definite correlation between tough economic climates (such as the one we are currently experiencing) and certain insurance policyholders trying to take advantage of the situation and defraud their insurers. One of the trends we are seeing in the market is an increase in fake death claims,” said Garth de Klerk, CEO of the Insurance Crime Bureau.
Credit life worry
As pointed out earlier; even before COVID-19, South Africa faced massive levels of unemployment. This will only increase as the movement to COVID-19 Risk Levels Two and One are prolonged.
The Insurance Crime Bureau warns their members against massive scams within the credit life industry. According to the Insurance Crime Bureau, unemployment insurance fund (UIF) claims are being placed on hold due to the exceptionally high volumes of claims being submitted to the Department of Labour. Desperate times calls for desperate measures and there has been a noticeable increase in fraudulent credit life claims because of this.
“Insurers need to protect themselves and we are urging them to be vigilant and to go through every credit life case with a fine-tooth comb before making a decision on its validity” said De Klerk.
Remote access joy
COVID-19 has changed the game when it comes to work. Companies have been forced to allow their employees to work from home. This has unfortunately opened the door for cyber criminals as the security of home internet networks are not as advanced as those of corporate internet networks.
“Hackers and cyber criminals are taking advantage of COVID-19 by sending fraudulent emails that look legitimate and attempt to trick victims into clicking on malicious links or opening attachments. According to the SAFPS, there has been a BIG INCREASE in Phishing and SMS scams that prey on the increased reliance on digital tools. The main objective for criminals is to get hold of your information, which is usually followed by account takeovers. These criminals are looking to commit insurance, banking or donations fraud related to COVID-19,” said Van Schalkwyk.
Companies are targets to
It is important to remember that it is not only the public that are potential victims during this time. Companies also face significant risks.
“Fraudsters are approaching clients, usually businesses, purporting to be suppliers advising that their banking details have changed and requesting payments to be made to a specific account number. In more sophisticated cases, legitimate suppliers’ e-mail accounts are hacked and used to send e-mails advising of the change in banking details. Losses are usually quite extensive due to the high business transaction values,” said Van Schalkwyk.
Where large financial institutions (such as banks) have multiple call centres, fraudsters are approaching various call centres purportedly as the client to change one piece of customer information at each call centre. Fraudsters will contact home loans to change a telephone number, and vehicle financing department to change an e-mail address, and in so doing changing the view of the customer without being detected in a single point of contact.
“Typically, the fraudsters would pass knowledge-based authentication protocols, as they would have the obtained the customers personal information through various means. One particular financial institution is phasing out knowledge-based authentication of clients and implementing voice biometric identification,” said Van Schalkwyk.
If it looks too good to be true, it is
“Unfortunately, criminals are smart and ruthless and will not think twice about taking advantage of a distressed individual who is experiencing a lot of risk or is going through a lot of pain during this time. We need to be aware of our surroundings and always remember: if it looks or sounds too good to be true, it probably is. View everything with a critical eye and you will be saved from fraudsters,” said Van Schalkwyk.
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ISSUED FOR AND ON BEHALF OF SOUTHERN AFRICAN FRAUD PREVENTION SERVICES GROUP
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