Fraud scams are running rampant in South Africa, with South African consumers experiencing the largest increase in scams across the world.

According to AI and analytics company SAS, scams that flourished during the Covid-19 pandemic have continued to proliferate.

Based on a survey of 13,500 consumers in 16 countries, the company showed the severity of the global fraud issue in 2022:

• Most consumers (70%) reported having experienced fraud at least once. Four in 10 indicated they have fallen victim to fraud twice or more.

• Nearly half (47%) said they experienced more fraud in 2022 compared to previously.

• Almost nine in 10 (86%) admitted to being more wary of fraud than in the past.

Although 47% of global consumers said that they experienced more fraud in 2022, the figures are notably more heightened in some countries than others.

South Africa topped the list, with 65% of consumers experiencing more fraud last year.

Second was Portugal with 62%, whilst the Netherlands was at the opposite end of the scale at 32%.

Biggest types of fraud

The main fraud strategy reported by survey respondents was attempting to obtain banking details or personal data, with phones and emails emerging as the communications channels most used by fraudsters to make contact.

“When fraudsters are successful in their exploits, organisations in highly targeted industries like banking, insurance, government, retail and telecommunications serve as unwitting conduits for criminal activity,” said Stu Bradley, Senior Vice President of Risk, Fraud and Compliance at SAS.

“Given that two-thirds of the consumers surveyed said they would change service providers due to fraud or if another provider offered better fraud protections, the potential consequences of inaction are substantial and should not be ignored.”

This sentiment was worse locally, with 88% of South African consumers saying that they were willing to switch service providers following a fraud incident or if another provider offered a better guarantee of fraud protection.

“In a post-pandemic new normal, consumers have come to expect instant access to just about everything – and the traditional sense of brand loyalty has become very fickle,” Marcin Nadolny, Head of EMEA Fraud & Fincrime & Data Science at SAS, said.

“Much of the spotlight today falls on curating experiences that save customers time and money whilst delivering brand value that they will enjoy coming back to. Security of customers’ identities, accounts and payments is crucial in that context.

“When a financial institution is not doing enough to protect consumers from fraud, it ultimately impacts brand reputation and results in poor customer retention. Based on our study, consumers are now open to sharing more personal and behavioural data for better security – and even more open in South Africa than in Europe.”

SAS said that shifting consumer attitudes show the importance of robust fraud defences. 96% of South African respondents said that their businesses should be doing more to guard against fraud.

Customers globally are also willing to make sacrifices for greater protection:

• Three-quarters of respondents worldwide said they would agree to more delays and checks in transactions for better fraud protection.

• Eight in 10 are willing to use biometric methods like facial recognition, hand geometry, retinal identification or voice recognition for payments and transactions. Further, more than half (57%) prefer to use unique identifiers like biometrics to authenticate at time of transaction versus remembering fixed passwords.

• Eight in 10 South Africans expressed a willingness to share more personal data (e.g., location, behaviour, etc.) with service providers on the basis that they use this information to boost anti-fraud measures.

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