South Africans are getting better at spotting fraud

0:00The Money Whip Crypto Podcast will be discussed all things crypto related. Your host, Keir and Ryan. South Africans are being exposed to scams on an extraordinary scale. But they appear to be getting better at recognizing them. The global anti-scamalized is later state of scams in South Africa report found that 85% of adults encountered a scam during the past year. The same percentage of confidence they can recognize scams, although half-stool continued interacting with the scammer. Almost one in five of those surveyed suffered financial or data loss, yet just 6% just 6% reported the incident to the authorities. And more than three quarters of victims said the experience affected their mental well-being. 53% were targeted again. What's going on here? It seems the scammers are also becoming more sophisticated using all sorts of technology tools to get into your bank account or crypto wallet.

1:01Well, you better to help explain all of this, but Talia Pillay, co-founder and CEO of South African fraud prevention company, Orca Fraud. Hi Talia, it's good to talk to you again. Hi Keir, and it's so great to be back. Thanks so much for having us. Sure. Okay, so let's get into this. The report says 85% of South Africans encountered a scam in the past year. 85% believe they were capable of recognizing one. So South Africans genuinely getting better at spotting scams or are the criminals just getting better at overcoming our defenses? What's going on? I think it's a mixture of both. I think the people, not just South Africans, but globally who are saying they can say they can spot scams better are also actively being scammed, but also just being in the end data with so many different types of scams that you might not even realize you're in one. So like the size scams we've been seeing the traffic finds scams romance scams. There's just so many different permutations and types. So whilst people must feel like they know, you know, how to detect a specific type and they're getting smarter and they know what to look for.

2:05There's also so many different types that the scammers are coming up with. And I do believe that AI has made it easier than ever to scam people at scale. So in the old days you could and about all days I mean like last year, you could look at the SMS and see, oh, you know, maybe it wasn't perfect sentences or the grammar wasn't correct or there was a single space after a full stop. These days we're seeing criminals just be able to do very hyper personalized SMSes because they know everything about you. So using a are they really able to do localization talk the local languages and really do do put into believing they who they who they say they are. Okay, that's your company. You monitor about 82 billion in transactions a month. That's a lot over 70 different countries. So just take us through some of the common types of fraud you're seeing you mentioned the size scam. You mentioned people being contacted by SMS. So there's different ways that they're going to reach out to you. So take us through what you're seeing as being fairly common these days. Number one fraud type with saying it's not Africa for moments definitely voucher fraud. So within formal economy, it's easier than ever to purchase vouchers to do a variety of things.

3:13So you can purchase Spotify vouchers, you can purchase the eats vouchers, but you can also purchase online gaming vouchers. And we're finding that these vouchers, you know, you can get them in a spaserschap. You can go to your local corner store and criminals are using vouchers as this headless way to learn the funds. And because it's not a lot of tracing prior to like the worker doing a worker, we've historically focused on monitoring crypto and card fraud, but no one's really focused on these alternate payment methods like vouchers. So we've seen a lot of great results by tracing the money and following the different parts across from card to crypto into vouchers. Otherwise, the money moves faster and as lost if you don't crack it in that way. Now in the report, you've identified Krasilina tell us as a big problem. A lot of digital fraud and syndicate activity happening there. And it also seems to be spreading to the Eastern Cape. So tell us how organized are these operations and what does a modern scam syndicate look like?

4:18I just have the record to show I'm from Krasilina tell so people people were a bit outraged when I said that, but it's my home province. Any bank any tell code any enterprise in South Africa we've spoken to all of them have said case it in. Aside from how thing is the most fraudulent province that far. I think there's a few things contributing to that, you know, the proximity to most of the big money laundering with seeing. We're also seeing a lot more syndication so to a point we have actually tracked different money laundering syndicates work their way from Krasilina tell into the Eastern Cape. And it's almost like the great migration of money laundered because these people are sitting up some farms like building their new networks. And really doing very organized crime and in doing so you can start to see a trail because you can see if you've been impacted who's being affected. And then when you start to block certain mules or block certain vouchers or payment methods.

5:19A 10 new ones appear in a different place. So that really speaks to the importance of geolocation as a signal. So it's not enough to just look at the data on the transactional side you also need to understand who's transacting and where they're transacting from. And then by doing that we do behavioral intelligence to be like okay does Karen normally into a like transact from the Eastern Cape or is it someone muleing his identity and things like that. Okay, so just tell us a little bit about some swap farm what is that we've observed a few some farms mainly in Kenya and Uganda and especially Kenya with the rise of in Pesa. And it'll be like hundreds of some cards and different devices and then they they're performing some swaps on those devices and then literally will see them change the some in a single phone device. So it'll be like a hundred sums a day and then they're really just doing that because they co-ordinating some swaps on the victim side and by doing the some swap you're then able to do things like getting the OTP to get access into the MPS account or the banking account.

6:25It's really interesting because using location again we're able to pinpoint exactly where they're operating from and in some cases we've been able to find the headquarters of these some farms. But it is quite a big issue because not only are there some farms we've seen similar things with call centers as well where people are spinning up fake call centers for travel airlines and stuff like that. And a whole call centers as a service where they're trying to do bushing attacks using your travel details. So yeah some farms onto onto new thing but with AI and stuff it's becoming easier because once they've some recycled for example and taking your mom some your mom's number they can then be like hey cure it. It's your mom. So it's really urgent and really pray on urgency. Right I mean one of the things that we've seen here quite a lot inside Africa because I mean you know with WhatsApp we're all on these different chat groups and some of these chat chat groups seem to get infiltrated by a guy you know who looks to be you know Dr. Andrew somebody or other.

7:28And and you get a phone call from the guys is hey you know there's a meeting tonight I don't know if you got the message I've just sent a code to your phone just just read out that code. I guess I'm one of the guys you know he's a little bit alert to this and it happened to me I didn't read about the code but what's what's he doing there why why is that code going to be important for him. So by by using that code he's probably using that as a OTP to get into one of your other accounts and especially when the case of some swap the actual first party needs to authorize it and share that code. So then when they have the code they're able to allow the some swap to occur so it does need to be that like authorize consent step which also makes it very hard to show where the liability sets. But yeah it's it's been super interesting because we've seen quite a few types of fraud in the past man where fraud is on personating your banks fraud team so like let's say one of the banks they'll call you and be like I'm a fraud analyst from X bank we've detected fraud on your account please give us the card or the pan to block the account.

8:41And because you're so stressed and it's so urgent and you you trust that this is your banks fraud team a lot of people are actually falling for this because you know these criminals are now acting like the people who are meant to protect you which is very terrifying. Orca fraud so you do monitoring a lot of transactions 82 billion. And huge amount who your clients is it the financial institutions the banks or is it you know the ordinary person on the street where B2B so it's mainly banks tell codes and enterprises and then we work with different players across Africa so we're in about 70 countries. So some of those are things like stable coin remittances where we're able to to do the army channel monitoring across both fear and crypto and there's been really interesting because the money is moving faster than ever which also means the fraud says love it. But we're also seeing really good positive applications of it as well. All right so now let's touch on this issue you mentioned stable coins and of course we're getting a lot of this cross chain activity meaning you know this switching between fear and and the blockchain.

9:44What role is crypto currency playing in these scams is it mainly used to receive an order stole a funds or crypto investment scams themselves getting into this and seeing this as a big opportunity. Thank you yes to both like we definitely see a lot of crypto investment scams where. The fraudsters are playing the long game they building crust they doing screen sharing typically with elderly people to get them to invest their life savings into crypto and this could be over 12 to 18 months typically targeting people that are the age of 65. But then on the other hand crypto is being used as a mechanism to move the money offshore so a lot of the fraud attacks we've seen in this past quarter have have involved crypto in some way. I do think crypto at the crypto communities amazing we're like is great crypto monitoring on chain monitoring tools so it's pretty easy to trace all the different hops and the legs in the journey. Where it does become hard is just understanding different countries regulations as well as the fear to implications versus the how much you can recover because it's moving so quickly.

10:52So with most recovery we've we've seen because the money is moving faster than ever does become a matter of time and speed in order to have the best chance of this into chance of recovering the funds. That's an important point so somebody who suffered a loss what's the very first thing that they should do when they become aware of that first thing is call your actual banks for a team so stop all your cards. What we're seeing a lot of is especially for stolen phones for us are then getting access to your on demand delivery apps so they might do like a 20,000 round liquor delivery which comes in 10 minutes and they resell the liquor so also making sure you stop any virtual cards or any cards which are stored on that literature 60 like all of those on demand apps it's not just enough to stop a single card anymore you really need to think about all the ways you're exposed. We also recommend going to the police and getting a case number so being able to take that case number to your fraud team also helps expedite it.

11:54We have seen a few recovery services there's some really great ones and investigators are strongly recommend but at the same time I actually saw one yesterday where someone's like falsely acting like they're recovering money for fraud cases but they're actually just defrauding you further. So yeah I think it's just really important to remind ourselves that even in your your darkest times it could get darker so make sure you don't let your guard down just because you're really stressed and you've lost a lot of money make sure you only talk to people you trust. Good advice now the report says that 53% of victims experience repeat scams does this suggest that victims personal information is being retained by the scammers then sold and circulated amongst different criminal networks in other is there a little sub industry going on there with these criminal networks are selling all of these stolen information. Definitely I think people forget criminal activity is a full time job for the criminals so it's fishy with the rise of data breaches we are seeing more details available on the dark web.

12:59So telegram chapter other day where you can like request someone specific all of the information which is terrifying to think someone knows who has all of your details that they ready to sell. Yeah so I definitely think the repeat victimization is something that we're going to see more and more of and because there's more channels available it's not necessarily going to be repeat on the exact same channel it could be on the channel across multiple different channels and also different platforms. So with some of the data breaches on the bank side you might expect just that bank account to be impacted but with those credentials they could then create fake accounts for you at other platforms using your same ID number your address all of those types of documents so then before you know it you could be signing up for things like home loans you could be signing up for different investment platforms so we are seeing a lack of burst and activity and other platforms not just the bank that had the data breach right now let's. Around this up a little bit yeah artificial intelligence has really changed the game for the scammers you mentioned you know in just go back a couple of years ago you would get an invitation or an SMS badly written English it would be one clue right now of course with AI that's that's overcome but they can do things like voice cloning they can even do face cloning and I think when we spoke before you mentioned instances where you know a mother might get a very anguished core for.

14:27The anguished core from her son what who she thinks is a son and they could even be put on video and all the voice could be made to sound like her son this is happening right yes it's happening so much and I think I always I always feel bad for a mongering but I'd rather people be aware of the risks of AI what are essentially doing is it's making it easier to do fraud at a much larger scale it's also making a way more cost effective because now in the same way that we can buy a code. All these incredible sites at the bottom of a yoga website for what this can also do very legitimate e-commerce sites so especially as we go toward black Friday this year i'm really really concerned just about how many fake websites we're going to see for the traditional e-commerce players and what we've seen recently is for us are also running adverts on these sides so both Facebook and Instagram ads and other other websites people are actually getting rooted to these fake e-commerce sites from ads so all those installs things like that they're paying such a long game they're giving so much to the just to see to these businesses that they even injecting money into running ads with them.

15:38So yeah we're also seeing a lot on the gender commos ad as well where people are using agents for payments and they're really just understanding the identity of the agent whether they authorize to do to make sure we're not enabling bot and bad activity. Give us some hands on what we should be doing just to be alert to this something that can be simply implemented one of our favorite controls are single purpose cards and so utilizing virtual cards with your relevant bank more. So like for example i have a single purpose card just for undemand delivery apps so then if something happens they have like a much lower limit and then for like let's say risk your sites where you know i'm up on to purchase something from abroad they are not to a single purpose card that's only authorized with that limit. So yeah just really looking into the types of virtual cards available to you and then distributing the risk accordingly so that if criminals do account tape over you they they have very low limits that they're working with and not you know your entire bank accounts contents.

16:43The single purpose is that the word you use their single purpose virtual cards and you get those from your bank presumably. Your different banks have certain approaches you phone your bank and you asked them i'd like to have a single purpose card that for example this is for my my checkers accounts all this one is my will was account. Put a limit on that i'm only ever going to spend 1000 random time you can ask for those a lot of them actually enable you to create the virtual cards in the after these days. So i think to scurry for example is really great but you can like issue multiple virtual cards and then have nicknames for them and say different limits it just does reduce the risk area parts of centrally if you then have. You know one one card for all your recurring subscriptions one card for like your higher risk payments and then limits that reflect that right when it comes to crypto of course it's it's a little bit different because your crypto is probably going to be stored on a crypto exchange. That's going to be a little bit harder for the person they're going to have to give you an address where to ship the crypto to but that does happen.

17:50No it does and i think there's also you know like cold storage and like all of the like lots of different mechanisms available for crypto as well. But even there you know the card that you deposit or top up your your crypto wallet with like having a single purpose card there it's quite nice. Because with all these data breaches if those hard credentials get leaked at least you know exactly where it got leaked from versus using the same card across multiple different sides and i guess also just be very suspicious of any approaches to do with. Finances and money yes yeah don't be so trusting i think especially when it comes to romance cam that's also why there's so few reported that six percent reported. Just because people do feel ashamed and guilty so just know don't trust and don't feel bad tell you play who is the founder and CEO of. For prevention company or for thank you very much tell you for your time. Thanks for listening to the money whip crypto podcast hosted by Kiran Ryan. To listen to our other podcasts go to moneyweb.co.z or the money whip app and follow money web news for daily updates.