Since the Covid-19 pandemic began, fraudsters in South Africa are increasing their digital schemes against businesses.

In addition, TransUnion’s latest quarterly Global Consumer Pulse Study found that 37% of South African consumers have recently been targeted by Covid-19 related digital fraud.

TransUnion’s findings on fraud against businesses are based on intelligence from billions of transactions and more than 40 000 websites and apps contained in its identity proofing, risk-based authentication and fraud analytics solution suite, TransUnion TruValidate.

The research found the percentage of suspected fraudulent digital transaction attempts against businesses that originated from South Africa increased by 43,62% between 11 March 2019 to 10 March 2020, and 11 March 2020 to 10 March 2021. The World Health Organisation declared Covid-19 a pandemic on 11 March 2020.

“Fraudsters are always looking to take advantage of significant world events. The Covid-19 pandemic and its corresponding rapid digital acceleration brought about by lockdowns is a global event unrivaled in the online age,” says Keith Wardell, product director at TransUnion Africa. “By analysing billions of transactions we screened for fraud indicators over the past year, it has become clear that the war against the virus has also brought about a war against digital fraud.”

In South Africa, across industries, TransUnion found the cities with the highest percentage of suspected fraudulent digital transactions against businesses coming from them were Durban, Johannesburg and Pretoria, in that order.

Consumers targeted by Covid-19 schemes

Provisional findings from TransUnion’s most recent Global Consumer Pulse Study – a survey of more than 10-thousand consumers globally, including 910 in South Africa from 5 – 17 March 2021 – found that the 37% of South African consumers who said they had been targeted by digital fraud related to Covid-19 in the last three months is higher than approximately one year ago. In April 2020, 25% said they had been targeted by digital fraud related to Covid-19.

Gen Z consumers (born 1995-2002) are currently the most targeted of any generation, at 39%.
Among consumers in South Africa reporting being targeted with digital Covid-19 schemes, the top pandemic-themed scheme is unemployment scams, with 29% saying they were hit with it.

Fraud types and their impact on industries

TransUnion analysed a range of industries for a change in the percent of suspected digital fraud attempts against them, comparing the periods of 11 March 2019 to 10 March 2020 and 11 March 2020 to 10 March 2021.

Suspected Digital Fraud Attempt Rate Post-Pandemic Declaration

IndustrySuspected fraud change coming from South AfricaGlobal suspected fraud change for industryTop type of fraud globally
Gambling239.87%54.81%Policy/License Agreement Violations
Financial Services114.68%57.49%Identity Theft
Retail86.32%38.71%Promotion Abuse
Telecommunications46.26%57.52%Credit Card Fraud
Logistics30.63%4.87%Shipping Fraud
Gaming-4.96%48.40%Gold Farming
Communities (online dating, forums, etc.)-15.71%-11.10%Profile Misrepresentation
Travel & Leisure-35.09%29.68%Credit Card Fraud

“The pandemic has shifted South African and global consumer habits to shop and entertain online more than ever before, which has also attracted digital fraudsters who have are increasingly targeting related industries,” says Wardell. “Despite these threats, consumers expect that businesses are able to protect their transactions but still maintain convenient digital experiences.”

Fraud causes extreme financial and reputational damage to businesses, and corrupt practices are often not detected and prevented early enough.

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