WeeklySA_Admin
Increase: War in Ukraine is one of the contributing factors to the ever increasing cost of living crisis
By Thuli Zungu
The world is currently facing one of the harshest economic climates ever experienced since the 2008 global financial crisis – one of the worst financial catastrophies in modern history.
This raises concerns that more people may turn to fraud to address the financial pressure they are experiencing. Manie Van Schalkwyk, CEO of Southern Fraud Prevention Service (SAFPS), says the rising inflation and the current war in Ukraine are two major contributors to the increasing cost of living crisis.
“This is putting many people in a difficult financial position. Reports out of the United Kingdom show that people are increasingly considering turning towards fraud to relieve this pressure,” says Van Schalkwyk.
Research by the Insurance Fraud Bureau in the UK revealed that one in four young adults now say they would likely consider an act of insurance fraud if they were struggling financially. This observation is a marked increase when compared to the same survey results taken last year.
Van Schalkwyk says the 2023 survey found that one in four (27%) of the age group 18-24, would think about lying when applying for an insurance to save money. In 2022, this statistic was one in five (21%) . This type of crime increased to 22 percent for one in five adults in the 25-34-year-old category.
The research points out that, across all age groups, one in ten people said they would consider making a fraudulent insurance application or claim when struggling financially. Nearly two in every five (38%) respondents also said they felt financially desperate, specifically due to the impact of the costof-living crisis.
Van Schalkwyk points out that this is particularly concerning considering the purpose of insurance. “Insurance is supposed to be a layer of protection for individuals who want to ensure they will be covered should they face a financial loss. Abusing this policy compromises insurers’ trust with their clients who enter into these contracts based on good faith.
We do not want to get into a situation where insurers will look at every claim with increased scrutiny because of the actions of a handful of dishonest individuals,” says Van Schalkwyk.
He adds that there is also the possibility that this could be a gateway crime to increase the prevalence of money muling. “Money muling is when a fraudster convinces another member of the public to allow them access to a bank account that can be used that will not arouse the suspicion of authorities.
Most of the time, the victim is promised monetary compensation in exchange for this. However, fraudsters use these bank accounts for other things and victims may find their identities stolen. This creates a greater problem for a person who acted as a Good Samaritan.”
Van Schalkwyk says the ramifications of being a money mule are extensive. The SAFPS continuously monitors insurance fraud trends along with the ICB. Further, the SAFPS offers key protection for individuals and companies who become victims of fraud.
Garth de Klerk, CEO of Insurance Crime Bureau (ICB), points out that while the ICB does not have access to the same kind of information that the Insurance Fraud Bureau has when it comes to the likelihood of insurance crime increasing within specific age groups, the ICB is aware of the current economic climate and the overall impact that it has on the insurance industry.
“While we do not keep the same kind of statistics as to the profile of offenders in South Africa, it is fair to say that there probably is an increase in the same age brackets where youngsters are feeling economic pressure especially due to unemployment.
If you have a look at the unemployment rate in South Africa, it is very high in the age brackets discussed in the Insurance Fraud Bureau statistics,” says De Klerk.
Van Schakwyk says it is not only insurers who are becoming victims. The public has become victims of scams in the past where scam artists pose as representatives from the consumer’s insurer and scam people out of significant amounts of money.
In response to the growing nature of scams, the SAFPS has launched YIMA, which is proving to be an effective tool.
“Yima is a platform that is a one-stop-shop for South Africans to report scams, secure their identity and scan any website for vulnerabilities related to scams. They can also educate themselves on identifying a scam.
These tools, which are free of charge, will enable consumers to surf the internet safely. While Yima does not prevent online transaction banking fraud, it allows consumers to shop online more confidently by ensuring that they are using a verified online banking website.
Further, the education component of Yima allows consumers to go about their daily lives aware and informed about scams.
These are just some exciting elements South Africans can access through the site,” says Van Schalkwyk. Yima’s priority is to provide the consumer with support before and after they fall victim to fraud and scams.
Van Schalkwyk says when a person becomes a victim of fraud and scams, they have to report this to the relevant authorities. They are emotionally traumatised and confused and are often unable to coherently deal with the stress that is related to becoming a fraud victim.
“One of the challenges of the past is that a victim had to approach a number of different authorities to report the case and to begin the process of trying to address the situation. This was very stressful. That is no longer the case as victims now have access to the Yima scams hotline that will address this challenge.”
Users will only need to remember one number rather than search for each institution’s fraud contact centre’s number when they must deal with a difficult situation.
Van Schalkwyk adds that the SAFPS has partnered with MTN and several key stakeholders to launch a hotline number to report fraud.
By dialling 083 123 SCAM (7226), victims of scams and fraud will be directed via interactive voice response (IVR) to relevant authorities such as the South African Police Service as well as their bank or other registered credit providers to report the incident. This will simplify the process of reporting these cases and will hopefully alleviate some of the stress that victims of fraud experience.
This is once again another example of how the SAFPS is changing the narrative when it comes to a proactive approach to combatting fraud and what the power of collaboration can contribute to fraud prevention.
Published on the 114th Edition
