South Africa has a cybercrime problem.

The robust presence of financial institutions makes it a rich target for fraud. On top of that, there was no real cybercrime law in place until just this year (2021), when the South African government finally placed a definition on what constitutes cybercrime.

FinTech (financial technology) is constantly under threat by fraudsters. However, the ambiguous approach by the law system in prosecuting fraudsters has put South African FinTech into a particularly at-risk situation. 

In 2020, a data leak at Experian South Africa saw data from an estimated 24 million South Africans and 800,000 businesses being exposed to potential fraudsters. While Experian claimed no financial data had been leaked, law enforcement apprehended the suspect and carried out an “Anton Piller order” to impound the suspect’s hardware and secure the misappropriated data. 

Unfortunately, this is just one of the many examples of fraud protection breaches in the country’s FinTech infrastructure. 

A FinTech News article published in 2018 found digital banking fraud at an all-time high, showing that 22% of users fell victim to fraud in a single year, a 10 percent increase over just 3 years prior. 

Let’s take a look at some of the most common types of FinTech fraud in South Africa today. 

Loan Scams Are the Most Common FinTech Fraud

Loan scams are the most common type of FinTech fraud that affect South African citizens. These scams prey on people who need money for whatever reason, perhaps to buy a car or a house, or for more personal reasons. The perpetrators are fraudulent FinTech businesses simply out to steal money and information. 

The loan offers generally seem too good to be true, and in the end, that’s exactly what they are. 

One prominent characteristic of these scams is a request for upfront fees. The fraudster offers a low-interest loan of any given amount, but in return asks for an upfront payment. When the victim makes the payment, the person simply disappears with the money. The loan is never actually given. 

Other loan scams simply try to gain access to the victim’s bank account information, claiming to need it for loan approval. Once the fraudster has the information, they use it to access the victim’s account and steal money. Or the criminals may attempt to obtain personal information that they can then use to perpetrate identity theft.

There are some common warning signs for potential victims to be on the lookout for when defending against loan fraud. 
  • Phone Offers – It’s illegal to make loan offers via telephone. All offers must be in writing and must prominently mention all fees. 
  • Payment Via Wire Transfer –  If a lender requests that you wire money for fees, that’s a big red flag. Wiring money is a way for fraudsters to obtain money anonymously. Always ask for a physical address and do research to make sure they’re a real institution. 
  • Doesn’t Show Interest in Credit History –  A legitimate lender will always want to check your credit history before offering a loan. If the lender doesn’t run a credit check, or they advertise that credit isn’t important, it’s not a good sign. 
  • Lack of Professionalism – If the lender shows a lack of professionalism, for instance badly written emails or letters, poor customer service, unprofessional language, etc., that’s a sign that they aren’t representing a legitimate institution.

Defending Against Loan Fraud

The best defense against loan fraud is being informed. Recognizing red flags, like the ones mentioned above, allows the potential victim to exit the interaction before any harmful transactions occur. 

However, there are always going to be people falling victim to loan fraud and other FinTech fraud tactics. This will also affect businesses and result in data leaks or fraudsters using illicitly obtained customer information to defraud businesses of money. 

In these cases, companies should consider utilizing professional defensive tactics to protect their data, their assets, and their customers.’s security platform offers defense against loan fraud, as well as advanced identity fraud protection.

South Africa’s businesses can rest easy knowing that we’re on the job. To find out how we can help defend your company against fraud, sign up for a free demo today.