Learn how to sidestep these common scams

With the growing number of transactions – financial and otherwise – taking place in the digital realm, the possibility of being scammed has increased markedly.

A consumer education specialist at the Financial Sector Conduct Authority (FSCA), warns, “Con artists are no longer people in black masks. Instead, they have purchased lists of targeted groups, used automated data-gathering tools, posted anonymously to online discussion groups, or built fraudulent websites – all to grab as much of your hard-earned cash as possible.”

We highlight three typical scams and provide pointers on how you can protect yourself against online fraudsters.

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Types of scams to look out for

• Pyramid schemes

These schemes offer high returns in a short period of time, and further earnings if you recruit more members to the scheme. Pyramid schemes don’t invest in any underlying instruments – instead, they rely on an increasing number of people at the bottom of the pyramid to supply money to the few at the top.

Pyramid schemes collapse when no more members join the scheme and cash runs out. They are frequently run by personal contacts or their friends, can be set up on WhatsApp groups, and may appear in the guise of stokvels, “gifting circles”, or non-traditional types of investments.

How to avoid being scammed

The key is to look at the return promised. “People should be wary of anything promising a ‘guaranteed’ return. The only return that can be truly guaranteed is a government bond, at 8.5% for ten years,” cautions Kyle Wales, global portfolio manager at Flagship Asset Management. “I’d be wary of any return in excess of 10%, and especially 20%, a year.”

According to the FSCA, you should proceed with caution if what is being promised seems too good to be true, the adviser or investment is unregistered, there’s no detailed prospectus showing exactly how the investment works, and/or you’re pressured into parting with your money right away, to “avoid missing out”.

• Travel fraud

As pandemic lockdowns fall away, you may be eager to travel again – but beware of travel industry scams. These can include being offered a free trip if you bring a partner along at full fare, or being told a trip can only be taken at a specific time, then losing your money as there’s “no room available” and no option to cancel. Another scam involves the company you book with not transferring money to your airline or hotel.

Fraudulent travel agency Hello Darlings recently scammed thousands of South Africans by promising luxury overseas trips that never materialised. 

How to avoid being scammed

Sue Garrett, general manager of supply, pricing and marketing at Flight Centre, says bona fide travel agencies or independent consultants will supply emergency and after-hours numbers, and they won’t be difficult to track down.

“Always book with an accredited industry member,” she says. “An offer you find online may appear inexpensive at first glance, until you realise on arrival that it doesn’t include a range of essentials – and you end up paying more.”

It’s better to pay with a credit card than by EFT, as it’s harder to reverse the latter transaction if something goes wrong.

• Dating scams

Finding love is tricky at the best of times, but con artists abound on dating sites. According to the US Federal Trade Commission, reports of romance scams skyrocketed in 2021, with losses hitting a record high of US$ 547 million. There’s a “Tinder swindler” around every corner – but not all of them have flashy lifestyles. They just need to gain your trust to establish an emotional connection with you.

Sharon Knowles, the founder of Da Vinci Forensics & CyberSecurity Specialists, says scammers often pose as good-looking men working in far-flung locations (often in the military) to avoid face-to-face meetings, and initially groom victims before asking for airtime, data or small amounts of money. These requests can escalate enormously at a later stage.  

How to avoid being scammed

David Burstein, CEO of the popular dating site DatingBuzz, says you should never send money to someone you have met online, no matter how genuine the request seems.

“Scammers are ruthless criminals who specialise in manipulating their victims. They build trust and then use it to extract money,” he warns. “Never, ever send funds, no matter the sob story.”

Reporting scams

If you think you have identified a pyramid scheme, contact the National Consumer Commission on 012 428 7000 or email complaints@thencc.org.za. You can also contact the SAPS Commercial Crimes Unit on 012 393 1295 or 0860 010 111 (TIP-OFF) or the South African Reserve Bank on 012 313 3911.

You can report fraud to the South African Fraud Prevention Service on 011 867 2234 or visit https://www.safps.org.za/ for more information.

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