Check out how much of an impact fraud, scams, and financial fraud are having on the business and the person – and what is being done to advance trust plus safety.
In an economy that is increasingly digital and rapidly evolving, the mandate for financial integrity has assumed even more relevance. As advances in technology, at the same time, unravel South Africa, there has been a steady increase in the level of commercial crime comprising frauds, swindles, and in particular embezzlement and corporate fraud. These are not crimes based upon the element of force; these are crimes based upon an element of manipulation and trust. Most often, it leaves the victim with a loss of finance, confusion, and even betrayed feelings.
From phishing emails to large-scale procurement fraud, these forms of crime have become more sophisticated and extensive, touching individuals from every stratum of the society – from small business owners to common consumers.
This paper discusses the major trends of commercial crime in South Africa, its impact on the economy and society, and the remedial actions being taken against it in a reader-friendly and engaging tone.
Commercial crime is a non-violent crime committed in the business or financial setting, aimed at personal or organizational benefits. It involves acts such as fraud, cybercrime, email phishing, online impersonation, embezzlement, misappropriation of funds, forgery, and identity theft, public and private procurement fraud. Though it does not create a sensation in the way violent crimes do on the few occasions when it does make the headline, its effects are serious, long-term, and deeply felt by those who are affected.
To what extent?
As indicated by the South African Police Service (SAPS), commercial crime is increasing. Over 400,000 cases of commercial crime were noted from 2021 to 2023 with a marked uptake in online fraud during the pandemic. In just 2023, over 45,000 fraud cases were taken up in Gauteng which is a humanly possible example. Major upticks were also recorded in Western Cape and KwaZulu-Natal on incidents relating to identity theft and compromised emails from the company.
Experts say the real figure of incidents can be even higher as many goes unreported due to embarrassment or even not knowing at all.
Common types of scams and frauds
Below are the most common types of commercial crimes that are inclined to South Africans today:
1. Online scams and phishing
One of the most rapidly increasing types of financial fraud is through e-mail or SMS, scamming people into giving personal or banking information. These messages often come from trusted places such as banks or tax offices. For instance, in 2023 the South African Banking Risk Information Centre (SABRIC) warned a wave of phishing scams that were targeting retirees and small business owners in which the messages required “urgent account verification.”
This elaborate fraud goes after firms, more so those dealing with outside sellers. Bad actors break into email accounts or make similar domains to send payments to their own accounts.
In a well-known case, a company based in Johannesburg lost 4 million rand after sending money to a fake seller following a convincing email chain.
3. Deals on Investments and Ponzi Plans
Many South Africans have fallen victim to quick investments promising high returns, which collapse once the flow of new investors ebbs, and hundreds and sometimes thousands are left with no savings. In the Eastern Cape, one such scheme raised over R20 million from local investors before being closed overnight.
These would typically involve government or corporate tenders that are manipulated, as well as inflated invoices or fake suppliers. While it is more common with large organizations, even smaller institutions can suffer when processes are not transparent.
The overpricing of medical supplies and the irregular contracting within the public health departments have been unveiled by the Special Investigations Unit (SIU).
Effects on the economy and society
Even though commercial crimes go under the radar most of the time, the effects are very powerful:
• The public funds are lost, thus undermining the government institutions’ trust
Small businesses find it difficult to recover from financial fraud
Families’ savings are lost to online or investment scams
This has raised cybersecurity costs, putting pressure on public and private budgets
As a result of the losses, the job market is suffering as affected businesses close
In summary, these crimes are undermining the economic growth and the public trust so brisk and so directly, touching not merely individuals but the country’s entire business climate!
What has accounted for the increase in commercial crime?
Several factors have brought about the increase in such a crime:
• Online vulnerability: As more services are provided on the internet, so too are the tactics of the criminals
• Economic drive: Fraud mostly thrives when there is economic pressure
• Low knowledge: The majority of the people do not know the signs of fraud
• Soft action: Investigations into commercial crime can be slow and underfunded
• Sophisticated methods: Criminals now use artificial intelligence, deepfakes, and global networks to remain undetected
While at the same time, evolving ever so slowly but with more and more urgency, public institutions are.
What is to be done to fight it?
South Africa is not sitting idle by. Authorities, banks, businesses, and civil society are working together on several fronts.
• Social campaigns by SABRIC and major banks to educate users on how scams are spotted
• Special units by the National Prosecuting Authority (NPA) to improve the prosecution of financial crimes
• In turn, cybersecurity firms are working with law enforcement agencies to trace digital footprints
• Irregular contracts and corporate fraud are two main focal points of interest by the SIU and Hawks at the moment
• In addition to fraud detection software, businesses are also investing in employee training
In 2023 alone, over 1,200 arrests were made in connection with cases of commercial crime and dozens of high-value cases are in the process of being heard in specialist courts during this year.
How can citizens and businesses stay protected
Though no system is foolproof, some pragmatic and user-friendly tips can help stave off fraud:
• Verify payment details before transferring funds, especially to new or changed accounts.
• Do not click links in emails or texts from unknown senders
• Use two-factor authentication in emails and banking apps
• Review investments before investing money
• Train your staff to recognize suspicious invoices or emails
• Report fraud, even if the loss seems small – this helps us to see the picture
Shame would be in reacting to fraud only after falling victim to it. The real shame would not be in wariness, but in trust where it is not due.
Commercial crime is a major problem in South Africa’s economy. However, the Companies and Intellectual Property Commission advises that the best way to shrink it is by using knowledge, vigilance and cooperation. Whether it is a small online scam or a big fraud, tools to help and protect people are getting better each day as South Africans are getting more used to digital services and building a modern economy. But besides this, such a culture should also be built that emphasizes financial literacy, knowledge of how to stay safe online and good ethics in business. After all, an economy thrives where trust exists, with or without added protection.
