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Digital banking scams to watch out for

Tuesday, January 22, 2019

According to the latest Columinate digital banking report, digital banking fraud in South Africa has reached its highest levels yet. Of the 13 000 digital bankers surveyed, 22% were victim to online banking scams, a rise of 3% from 2017 despite a reported increase in the knowledge regarding these scams.

According to Columinate’s co-founder and CEO, Dr Henk Pretorius, while banks are taking the initiative to educate consumers on digital banking fraud, their messages are still not reaching the majority of South Africans, and the knowledge to spot these scams before falling victim is lacking. While technology continually improves to secure banking websites, so too does the knowledge of the criminals who use the technology to defraud people. We take a look into some of the biggest digital banking scams to be aware of, and how you can guard against them.


Advanced loan

According to the report, 13% of those surveyed were victims of this scam in the last year. Victims are contacted under the premise that they have access to a “free” personal loan, and are asked to transfer funds in order to secure the loan, and promised that an even higher amount will be given to them in the near future. Fraudsters often pose as agents from legitimate banks or will operate under the name of a non-existent financial institution. Once the victim transfers the money, the agent disappears and become virtually untraceable.


“You’re a winner”

This particular scam contacts people via email, or SMS, pretending to be a representative from a well-known company or a celebrity, congratulating them on winning a competition they most likely didn't enter. In order to claim their supposed prize, victims are encouraged to reply and eventually will be asked to hand over personal details, such as their banking information. Fraudsters are handed sensitive details which help them rob their victims of their hard-earned money. The Columinate report found that 8% of those surveyed fell victim to this particular scam.


Update banking details

Victims of this scam are contacted via email and requested to update their banking details. The email is often made to look legitimate by copying a company’s logo or letterhead known to the victim. By supplying your banking details, fraudsters are able to access your account easily and remove your money

Luckily, if you come across a message - whether an SMS, WhatAapp or email - that doesn’t look legitimate, there are a number of ways to identify whether or not it is a scam. While it is the responsibility of our banks to ensure they provide safe platforms we, as digital bankers, can also ensure we are knowledgeable about the scams out there.

Here are a few tips to keep in mind:

  • Banks do not ask for your personal information (username, password, pin number) via email, SMS or phone call. Never hand over this information via these channels.
  • If you receive a message congratulating you on winning a competition you didn’t enter, don’t click any links or reply to any number placed in the message.
  • No authorised financial services provider will request money to be transferred to them to secure a loan, this is a sure sign of a scam.
  • If you are wary of a financial institution which has contacted you, find out if they are a legitimate service provider by contacting the Financial Services Board Fraud and Ethics hotline on 0800 313 626.

Digital banking crime and other cybercrimes, increase year on year, and while no system is entirely unhackable, we as consumers can take measures to mitigate the potential risks - one of which is to take out Cyber Insurance, which provides cover for various cyber threats like online identity theft.