Scams are widespread throughout South Africa and it’s easy to fall prey to wily criminals if you aren’t aware of their modus operandi. Susan Coetsee, head of the commercial crime office at The SA Banking Risk Centre (Sabric), offers some advice for entrepreneurs. These are the most common scams to watch out for:
1. Deposit Slip Scams.
The “customer” deposits a cheque into the business’s bank account and provides proof of payment, but the deposit slip is amended to reflect a cash deposit and faxed to the business, which releases the goods. A few days later the deposited amount is reversed because the cheque is either stopped or found to be fraudulent. Deposit and refund scams are widely prevalent and fraudsters introduce variations to the scam to maximise their chances of catching victims off guard. They prey on long-standing relationships between businesses and their clients and will often use known business logos or letterheads to commit the scam.
Always view any request for a refund with suspicion, investigate thoroughly, and wait for the deposit to clear.
2. Identity Theft
This happens when a person’s personal information (such as ID number, pay slip, driver’s licence, municipal account, banking details) is stolen and used to acquire credit or goods from unsuspecting businesses. Fraudsters may also steal a business’s information (such as company logos and address details) and use this information to redirect payments due to the company to their own bank accounts. Always research the profile of new credit applicants thoroughly.
3. Advance Fee Fraud (419 scam)
Syndicates targeting business people through the Advance Fee Fraud scam fabricate stories around possible scenarios. You may be approached about the availability of a lucrative investment opportunity. Once you show interest, the fraudsters request payment of fees in advance. The syndicates use social engineering techniques to make their requests for advance fees very real. By the time you begin to doubt the legitimacy of the investment “opportunity”, you will have unsuspectingly parted with a lot of money. Always remember that any opportunity that seems too good to be true usually is.
4. Telephone diversions
This is not a scam, but it’s a common occurrence. A cheque is either intercepted by a syndicate in the postal stream (and payee details are altered) or a counterfeit cheque is manufactured using the bank account details of a targeted business. A runner is recruited and sent to the bank to cash the cheque. The bank phones the business to confirm the legitimacy of the cheque, but the client’s line is intercepted and redirected to one of the syndicate members who will confirm that the cheque is valid and that the bank may cash it. The business will only notice that it has fallen victim to fraud when it receives its monthly statement. If your company becomes a victim of fraud, always ensure that you conduct a full investigation. This may put an end to internal staff collusion in future and will also send a message that your company is not an easy target.