In the digital age, collaboration is the key to winning the fight against fraud. By sharing experiences, strategies, and best practices, we can enhance collective knowledge and provide clients with even greater protection.
Every day, millions of rands are lost to increasingly sophisticated fraud schemes, leaving South Africans vulnerable and distrustful. According to the Insurance Crime Bureau 2024 Annual Report, the growing threat of fraud and organised crime costs South Africa around R3.5bn year-on-year, and these numbers only continue to grow.
Schemes and scams once limited to basic impersonation and counterfeit claims, have now snowballed into complex operations that exist purely to exploit an exploding digital landscape. Today, we must contend with phishing attacks, AI-driven impersonation, and social engineering tactics as the norm rather than the exception.
For financial intermediaries, there is a growing responsibility to guide clients through financial decisions, but also guard them against fraud. As an industry, we must recognise this challenge and commit ourselves to empowering South Africans with the tools and knowledge they need on their journey to success.
Threat to trust and financial security
Fraud statistics for 2024 from the Southern African Fraud Prevention Service highlight a 32% rise in fraud incidents, with impersonation fraud cases increasing by 54%. These numbers underscore a sobering reality for consumers and intermediaries alike. Scams not only result in immediate financial losses but also deal a severe blow to client confidence and trust in the financial services industry.
The financial repercussions of scams are staggering. PwC’s 2024 PwC Global Economic Crime Survey estimates that economic crime costs South Africa billions annually, with a significant portion tied to fraudulent insurance claims. In one prominent case, impersonation fraud cost an insurer millions in fraudulent payouts, ultimately driving up premiums for all policyholders. These incidents highlight why intermediaries need to stay ahead of emerging threats.
Victims often feel embarrassed, betrayed, and hesitant to re-engage with financial professionals. This eroded trust presents a unique challenge for intermediaries, whose value lies in fostering strong, resilient client relationships. A holistic approach to client care now requires intermediaries to acknowledge and address the emotional impact of scams alongside the financial repercussions. This demonstrates empathy and reinforces the value of the intermediary-client relationship.
Evolution of scams
Fraudsters today leverage technology to exploit vulnerabilities on an unprecedented scale. Syndicates impersonate policyholders and brokers to access sensitive information like policy schedules, claims history, and even recovered vehicles. Others deploy fake identities to deceive consumers into paying premiums into fraudulent accounts.
Social engineering tactics have intensified as, more and more, scammers pose as legitimate buyers, getting the keys placed in the palms of their hands based on a falsified proof of payment – easy to replicate. It is alarming that some clients are even in cahoots with the scammers themselves – increasing the costs across the board with higher premiums for everyone.
Empowering intermediaries to combat fraud
As financial advisers and service providers, we are perfectly poised to act as a first line of defence against scams. By staying informed and proactive, we help safeguard our clients and contribute to a more secure industry and economy. As service providers, we must commit ourselves to supporting intermediaries in this role through a combination of education, collaboration, and cutting-edge tools.
Here’s how intermediaries can strengthen their fraud prevention strategies:
- Ongoing client education: Share insights about the latest scam tactics, from phishing and fake premium collection schemes to identity theft and impersonation fraud. Use engaging formats such as webinars, infographics, or case studies to make the information accessible.
- Build digital confidence: Many clients, particularly those who may be less familiar with technology, may feel overwhelmed by its complexities. Guide them in adopting basic cybersecurity practices, such as using strong passwords, enabling two-factor authentication, and avoiding suspicious links or emails.
- Create a safe reporting environment: Intermediaries must encourage clients to report any suspicious activity. Establishing secure, judgment-free communication channels where clients can easily report suspicious activity fosters trust and allows intermediaries to act swiftly when potential fraud arises.
- Supporting Recovery Efforts: Beyond preventing fraud, intermediaries need to support and assist clients in the recovery process. This includes providing financial guidance, and helping clients navigate the aftermath of fraud. Supporting clients with the emotional and financial toll of scams is vital for rebuilding trust and resilience.
Engaging educational content
Presenting information in a format that’s as engaging as it is educational will help clients internalise the information. For example, at Momentum Insure, our Circle of Safety 3-part series takes an in-depth look into the criminal world of scammers with journalist Mandy Wiener. This digital safety campaign serves as a cornerstone of our commitment to empowering consumers through entertaining and informative content, including interactive videos and bite-sized digital workshops, we equip consumers with the insights they need to combat scams effectively.
On top of this, our digital safety features are designed to identify and mitigate risks at multiple touchpoints. For instance, you can check if your email address has been part of a reported data breach and find out how it happened. Clients also get unlimited access to credit reports and can validate their digital identity. By combining technology with a human-centred approach, we aim to mitigate the financial impacts of scams across the board.
Shared responsibility
As the landscape of scams continues to evolve, so too must the strategies of those tasked with protecting clients. Financial intermediaries play a critical role in fostering financial resilience and emotional recovery in the wake of this seemingly unstoppable wave of fraud.
We urge all financial intermediaries to take proactive steps in educating clients, sharing knowledge, and utilising advanced tools to combat fraud.
As for us, we stand by them in this mission, adding tools, education, and a collaborative platform as weapons in their arsenal. Together, we can turn the tide against fraud, rebuilding trust and protecting the future of South Africa’s financial security.
