South Africans lost R1 billion to digital banking fraud

Money lost by South Africans to digital banking fraud increased from R735,000 in 2022 to R1.1 billion in 2023 - a 47% increase.

This is according to the South African Banking Risk Centre's (Sabric) banking fraud report for 2023.

The report found that South Africans lost R3.4 billion to banking fraud across 1.59 million incidents reported throughout the year.

Of these 1.59 million incidents, only 52,584 or 3.3% fell within the digital fraud category. On the other hand, 32% of money lost to fraud was stolen digitally.

For comparison, 1.5 million card fraud cases were committed over the same period, with R1.1 billion stolen.

Similar to the increase in money lost, the number of digital fraud incidents also rose by just under 50% from 2022 - from 36,178 to 52,584.

Sabric attributes this rise to fraud cases involving banking apps, which comprise 60% of all digital fraud incidents and result in an average loss of R19,793 per incident.

"As more individuals rely on these apps for financial transactions, fraudsters identify new opportunities to exploit vulnerabilities, employing various social engineering techniques to obtain victims' information," Sabric said.

"They manipulate users into revealing confidential data, such as usernames and passwords, which is then used for fraud."

The report notes that vishing or voice phishing, where scammers contact customers via phone calls, posing as bank officials to extract sensitive information, was the most frequent form of attack.

The rest of the digital fraud was related to online banking (21%) or mobile banking (19%).

Online banking fraud victims saw the average value per incident rise from R36,614 in 2022 to R37,197 in 2023, reaching R412 million in gross losses.

Once again, Sabric noted phishing, manipulating someone into revealing sensitive information using digital means, and vishing were the preferred attack methods.

It also pointed out the rise in fraud-as-a-service platforms where criminals can access tools, resources, and techniques for committing fraud.

On the other hand, far less money was lost to mobile banking fraud.

While money lost only accounted for 4% of losses, money stolen from these victims more than doubled from R21.5 million in 2022 to R45 million in 2021.
Beware Black Friday banking fraud

These threats are particularly important to bear in mind going into the Black Friday and Christmas shopping season.

"Over this period, unsuspecting consumers may fall prey to false websites appearing legitimate and designed to harvest card information or online banking credentials," an Absa spokesperson told MyBroadband.

"The harvesting of this information may lead to subsequent social engineering performed by fraudsters, and this occurs when the consumer is asked to authorise future fraudulent transactions or payments."

To mitigate these threats, Absa has suggested several tips to prevent falling victim to fraud attacks.

The first is to be suspicious of deals and specials sent via email or text message, as this may be a counterfeit goods scam. Thoroughly researching the brand the goods are being purchased from is the best way to prevent being scammed.

One way to do this is to use the banking industry-endorsed website vulnerability scanner YIMA to confirm that the website is not a scam.

Although it may be difficult to discern over Black Friday, deals that seem too good to be true are usually fraud, according to Absa. Once again, research is essential to determine the legitimacy of the deal.

Absa suggests using a low-cost and secure payment method, such as PayShap, for people selling goods below R5,000. This is so that the funds become available immediately.

The bank says shoppers should also be vigilant of calls from banks asking to reverse fraudulent transactions on their accounts; they should pause before responding.

If customers are asked to approve the reversal using their mobile app or by sharing a one-time PIN, they should immediately drop the call.