Covid-weary consumers told: Upfront fees spell scam

Financial services consumers urged to be hyper-aware

Manie van Schalkwyk, executive director of the SA Fraud Prevention Service, says the requirement that you pay an upfront fee is a tell-tale sign that you’re dealing with a fraudster.

Criminals commonly use SMS and WhatsApp to lure their victims with the promise of cheap loans. Picture: 123RF/PETER KOVáÄ?
Criminals commonly use SMS and WhatsApp to lure their victims with the promise of cheap loans. Picture: 123RF/PETER KOVáÄ?

Guard your personal information and interrogate all offers of loans and investment opportunities – especially when these offers are made via SMS and WhatsApp, and especially at this time.

Criminals commonly use SMS and WhatsApp to lure their victims with the promise of cheap loans. Once you apply for the loan, you get asked to pay an upfront fee – sometimes a legal fee – which the so-called lender says is payable before it can release the loan amount to you. If you pay the upfront fee, you will never see that money again, and nor will the loan materialise. 

Manie van Schalkwyk, the executive director of the Southern African Fraud Prevention Service (SAFPS), says the requirement that you pay an upfront fee is a tell-tale sign that you’re dealing with a fraudster.

In recent months, fraudsters have passed themselves off as representatives of Direct Axis, Bayport, Wonga and Bidvest Bank, to catch unsuspecting consumers. Van Schalkwyk says that since consumers were under the impression they were dealing with these companies, all have suffered damage to their brands.

There have also been recent incidents of fraudsters using the Sanlam brand to mislead consumers into contributing money to an “investment” or paying to apply for a personal loan, according to Megan Govender, the head of forensics services at Sanlam.

In a warning to the public, Govender says Sanlam will never ask you for an upfront payment or administrative fee to process a loan application.

He says Sanlam’s WhatsApp facility uses the following numbers only: +27 860 726 526 and +27 861 235 433.

While some scams may use Sanlam’s actual employees’ names, if you have doubts about the legitimacy of the offer, you can verify it by calling the Sanlam Personal Loans Call Centre at +27 861 44 00 44 or visit Sanlam’s Personal Loans web page.

Never before have so many South Africans faced financial hardship on such a widespread scale and desperation makes people more willing to take a chance on something that would normally set off alarm bells.
Asisa CEO Leon Campher

If you receive an email that is from Sanlam, the sender’s email address will end with “@sanlam.co.za”, the communication will be directed at you, greeting you by your name and/or surname and it should not have any spelling or linguistic errors – these may be indicators of a scam.

Govender says consumers of financial services are being targeted by scammers at this time and are urged to be hyperaware. 

Leon Campher, the chief executive of the Association for Savings and Investment South Africa (Asisa), says current economic conditions provide ideal conditions for crooks to ply their trade. 

“Never before have so many South Africans faced financial hardship on such a widespread scale and desperation makes people more willing to take a chance on something that would normally set off alarm bells,” he says. 

You should expect to be confronted by people trying to talk you into joining pyramids schemes, Ponzi schemes, WhatsApp stokvels or buying illegal products disguised as products belonging to Asisa members. “There’s even a good chance that a family member or good friend, who fell for the enticing stories of impossibly high returns, will be the one trying to talk you into joining. However, these schemes inevitably collapse, leaving you with nothing.”

If an investment or loan offer sounds too good to be true, it probably is, Campher says.

Govender says scams that have made headlines recently include the Planet49 “Covid-19 relief promotion” scheme, which supposedly supported local grocery chains but actually harvested participants’ personal information; the WhatsApp gifting scam, which promised members great returns on initial investments of R200; and the bitcoin scam which leaked the personal information of about 250,000 individuals from 20 countries.

The main objective for criminals is to get hold of your information, which is usually followed by account takeovers.
Manie van Schalkwyk, executive director of the SA Fraud Prevention Service

He says that as soon as criminals have your ID number, they’re in a position to purchase your entire profile from the dark web, including your full name, credit record, where you live, the amount outstanding on your bond, your phone number and more.

“They can use that information in myriad ways, from attempting to change your internet banking password and accessing credit in your name to impersonating you to your insurer or investment company to retrieve your funds and benefits,” he says.

Van Schalkwyk says hackers and cyber criminals are taking advantage of Covid-19 by sending fraudulent emails that look legitimate and attempting to trick victims into clicking on malicious links or opening attachments. “There has been a big increase in phishing and SMS scams. The main objective for criminals is to get hold of your information, which is usually followed by account takeovers.” 

He says that 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. For example, fraudsters will contact home loans to change a telephone number, and the bank’s vehicle financing department to change an email 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 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,” Van Schalkwyk says.

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