Why businesses need to protect their customers from fraud

Online impersonations and fraud have recently increased, according to the Southern African Fraud Prevention Service (SAFPS). These cyber crimes are primarily carried out using phishing and compromised databases, which large enterprises use to store personal information. Big companies are responsible for safeguarding the data and information of their customers.

4C Group of Companies offers a range of support services for business applications, hardware, operating systems and databases. These include fraud prevention through their business assurance services. Their iNSight software delivers effective fraud management and helps to minimise the potential revenue lost through scams, impersonations and money laundering.

iNSight’s fraud management system monitors enterprise data to identify any potential fraudulent activities. Multiple in-stream alarms are triggered when potential fraud scenarios are detected. The software has the ability to automatically create fraud cases, giving analysts and investigators a centralised view of each case.

Impersonations on the rise in South Africa

SAFPS reports that compared to the same period in 2021, incidents of online impersonation and fraud increased by 264% in the first half of 2022. “This is particularly concerning given the economic climate that we are currently facing,” explains SAFPS CEO Manie van Schalkwyk.

“Consumers are facing a significant cycle of high inflation and are looking for ways to make ends meet. This makes them increasingly vulnerable to scams and schemes, which are being carried out by highly-motivated, highly-skilled fraud syndicates,” he adds.

This year, cyber criminals have attacked some of the biggest corporations in the country, including Dis-Chem, TransUnion, and Experian. Due to the exposure of millions of South Africans’ personal data, hundreds of millions of rands have been lost to ransoms and lost revenue.

These attacks not only pose a threat to ordinary citizens but also lead to company data breaches that can impact the entire supply chain. “The various data breaches have all highlighted the vulnerability of personal information and how easily accessible they are to the motivated criminal,” states van Schalkwyk.

More insights from SAFPS

According to SAFPS statistics, 62% of all recorded fraud cases in South Africa occur in Gauteng, making it the country’s fraud epicentre. This is hardly surprising given that Gauteng is the financial powerhouse of the country and that Johannesburg is home to many multinational organisations and global enterprises.

KwaZulu-Natal accounted for 18% of the fraud incidents in the first half of 2022 – a 102% increase from the same period in 2021 for the province. Although just 8% of all fraud cases were found in the Western Cape, this is a 133% increase from 2021, making it one of the highest increases in the country.

Money mule fraud, or the fraudulent use of retail banking accounts, surged by 97% in 2022, according to SAFPS. “Money muling is a significant global risk. Reports from Cifas in the UK point out that money muling funds illegal activity such as money laundering, terrorism and human trafficking. Obviously, this is concerning, particularly within the South African context,” highlights van Schalkwyk.

Enterprises must protect their data and strengthen their cyber security for databases, networks, and IT systems in light of the rise in cyber crime. According to the Protection of Personal Information (POPI) Act, businesses have a responsibility to protect the personal data of their customers and business affiliates.  In the worst-case scenarios, failure to comply may lead to significant fines and imprisonment in addition to reputation damage.

Particularly in the digital era, cyber security is a critical factor in determining business success. By improving productivity, regulatory compliance, business continuity, viability and brand credibility, it not only provides a defensive position but a quantifiable return on investment as well.


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Written by Taryn Hill

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