According to the South African Banking Risk Information Centre , South Africans lost more than R1.5 billion collectively in banking and card fraud alone in 2020 . Add other scams into the mix, along with victims who are too ashamed to report being targeted, and that number is likely to be significantly higher.
“On top of this, technology has made instant investing more accessible. Unfortunately, fraudsters are giving old-fashioned scams a digital makeover and using online channels to fleece their victims.”The new-age pyramid scheme Initially, investors may receive great returns and can confidently assure new recruits that the investment will pay off. However, these schemes are not sustainable. As soon as the pool of new investors and additional investments dries up, the scheme is unable to provide returns to its investors and inevitably collapses, leaving investors with permanent capital losses.
To pull off this scam via social media, a scammer will create a legitimate-looking social media profile showcasing exotic travel destinations, expensive cars and designer clothing. While many of us believe we could never be caught out by these seemingly obvious scams, the reality is, it can happen to the best of us. If a con artist has swindled you out of money in South Africa, you are not alone. Studies suggest that trying circumstances can make even the more financially savvy vulnerable to being duped.
If you don’t understand how an investment product generates its returns and there are no clear underlying assets, you should be cautious.