It’s International fraud awareness week

13 Nov 2017 - 15:30

Each year, billions of rands are lost in fraudulent activities across the world. Based on a survey conducted by the Association of Certified Fraud Examiners (ACFE), it is estimated that a typical organisation loses 5% of annual revenue to fraud annually. The findings reveal that the biggest targets for corruption-related fraud are the mining sector, followed by the transportation, oil and gas, manufacturing, and technology fields.

What is fraud?

This form of crime involves wrongful or criminal deception by a person or group to get financial or personal gain. It can be carried out in various forms including consumer fraud, corporate fraud, tax fraud, identity theft, and card fraud, among others.

Fraud cases in South Africa have recently been brought to light with a wanted fraudster finally being captured after being on the run for several years. He was wanted for fraud cases totalling to about R20 million. In addition, three fraudsters were convicted in September for conning Bonitas Medical Aid scheme out of almost R1.3 million. Their underhand activities took place between 1997 and 1999.

Get rich schemes lead to empty purses

A South African man was also recently sentenced to 15 years’ imprisonment after being caught for running a Ponzi scheme worth about R278 million with his wife. She was sentenced to three years house arrest. They were found guilty of fraud and contravening the Banks Act from the period of 2002-2009.

A Ponzi scheme invites potential investors to invest in a scheme or business, with promises of unrealistic large returns on investment in a short time period. The aim is to continue to get new investors so that those who are already part of the scheme get cashbacks.

Pyramid schemes operate differently in that once a member makes an initial entry payment they are then required to get additional people to join the scheme to get rewards.

In most cases, these schemes are typically run by fraudsters trying to get innocent people to part with their hard-earned money. Before joining a get-rich-quick scheme, rather consider these tips provided by the South Africa Reserve Bank:

  • Do research before choosing a scheme.
  • Get advice from financial advisors.
  • Take your time before deciding on an option.
  • Be wary of schemes that promise to make you rich in a short time, or those that mention a “secret formula”.

Card fraud continues to affect innocent victims

There have also been an increased number of cases involving credit and debit card fraud. In fact, the ACFE results shows that the education sector has the highest number of card skimming incidents. Criminals use a card skimming device to fraudulently copy bank details stored in the magnetic strip on a bank card. In South Africa, card skimming is mostly done at ATMs, but there is still a chance that fraudsters could get access to your card when swiping at a retailer.

These are the most common ways of bank cards are used to commit fraud:

  • Counterfeit cards: Illegally manufactured cards are created using personal information that is stored on the magnetic strip of a genuine card that has been lost or has expired.
  • Card not present: These are incidents where neither the card holder nor the card is present at the point of sale (whether online or telephonically).
  • Lost or stolen card: Illegal transactions are made after the card holder reports a card as lost or stolen.
  • Account takeover: A fraudster poses as the legitimate card holder and uses the rightful owner’s personal information to change account owner. The fraudster then manages the account.
  • Card not received: A card needs to be delivered, or collected from the bank, but it is intercepted and the rightful owner doesn’t receive it.

The Banking Association of South Africa encourages you to always be on your guard and remember these tips:

  • When making payments, never let your card out of your sight.
  • If another person handling your card displays suspicious behaviour, immediately report them to your bank.
  • When using an ATM, accept help only from bank staff.
  • Before using an ATM, always check it for any tampering, damage, or foreign objects. Never use affected ATMS. Instead, report the affected ATM to your bank as soon as you can.
  • Regularly check your bank statements for suspicious transactions.
  • If you no longer need bank statements, receipts, and financial information, shred or burn these documents.
  • Never leave your card lying around where others can take it.
  • Never let another person use your card.
  • Never share your PIN with anyone.
  • If you need to pay online, ensure that the website you’re using is secure and reputable.
  • Avoid sending emails that contain your card details.
  • If you spot any irregular transactions on your bank statement, report them to your bank immediately.


Fraud at UCT

There have been cases of fraud at UCT in the past, but these have been dealt with accordingly.

If you suspect fraudulent, corrupt or unethical practices at the university, please report it immediately to the UCT whistle-blowing hotline on 0800 650 000. The toll-free call centre (when dialling from a Telkom line) is available 24/7, 365 days a year. All matters reported via the hotline are referred to the Risk Management Committee to review and ensure that the necessary action is taken.