Financial Investment - scam awareness

Financial crimes and scams targeting South Africans This article aims to alert South African consumers about financial or investment scams, how to identify a potential scam and who to call if you know of a scam or have been a victim of one.   A scam can be defined as a fraudulent scheme performed by a dishonest individual, group, or company in an attempt to obtain money or something else of value from you. Scam artists pretend to be people of status and class they can even be people you trust and know. The scam itself is conducted over the telephone, a meeting or via the internet. Anyone can be scammed whether you are young or elderly, educated or illiterate. Scams are formulated with one purpose - to make money. Many are based outside South Africa’s boarders and those that operate within South Africa are illegal.  These illegal enterprises purchase address books and mailing lists from data banks. Call centre agents or “brokers” are tasked with calling you, in an attempt to sell you an investment opportunity. Remember the movie “the wolf of wall street”. A team of young men charm and coerce people over the phone to buy stocks on the stock market.  Sad to say, the only people who made money were the scam artists. The investors lost their money. This is the world we are living in today. A very real and serious issue has erupted in South Africa and we need to protect our money and ourselves. Mariekie Jansen 60 ¯. A retired teacher received a phone call a year ago. The telephone operator had a strange accent and made promises of how Mariekie’s pension money could double within a year. The operator was very convincing. All Mariekie had to do was purchase stocks he was selling. Mariekie, impressed by the idea of having double her money within a year, thought of all the things she could do with the additional money. Finally she could buy a brand new car for her son and give her laatlammetjie (last born), Julia an opportunity to study at college. She invested R100 000 of her pension pay-out. Unfortunately, after Laura transferred the money, she struggled to get hold of the company who promised to make her dreams come true and when she got hold of them, the company told her to be patient and that her money would come. It’s been over a year and Laura has received no returns or seen her R100 000. The above scenario is an example of a financial investment scam also known as boiler room scam/operation. The term refers to an outbound call center selling potential investments by telephone (also known as cold-calling). The scam artists use high-pressure and dishonest sales tactics, selling penny stocks, private placements or property developments. They convince you that this is a “once in a lifetime” offer and that you have to buy in on the deal within a limited period.  While the stocks they sell are illegal, the information these sales people use could be false and misleading because of their overwhelming desire to claim commissions. The call centre agents claim to have offices in different countries to give the impression of importance and wealth, but in reality they have set up fake offices and companies. Most of these agents are not even qualified to work in the securities industry or authorised to sell financial products. In South Africa all financial services providers (FSP’s) need to be authorised by the Financial Services Board (FSB). Their information can be found at the end of this article. Recently, the FSB released a public warning to all South Africans against one such company; Fraser Mackie Wealth Management (FMWM) who is based outside SA boarders. This company is based in Santo Domingo, Dominican Republic and solicits South Africa citizens for investment opportunities with the promise of huge returns i.e. doubling the investments. FMWM is not an authorised financial services provider and therefore is not allowed to render financial services in South Africa. The truth is that some countries do not feature high on the radar screen of internationally regarded jurisdictions in both the financial regulatory or enforcement areas and scam artists use this to their advantage because it is extremely difficult to pursue and bring perpetrators to book. The Financial Intelligence Centre (FIC) recently released a booklet entitled “Combating financial crime in South Africa” with information on what to look out for and how South Africans can avoid falling victim to common scams. The Typologies report focuses on a selection of prevalent crimes, defining each scheme, explaining how it works and how to avoid being a victim. The booklet explains eight common scams prevalent in South Africa at the moment. It is important to note that there are new scams being thought of everyday and this is a dynamic and evolving industry. The book can be accessed by clicking on the following link; Scam Tips 1.    A promise of high return on a low-risk investment. A financial investment is a big decision especially if you are parting with your hard earned cash. Take time before committing to an investment. If you are asked to respond immediately to a “once in a lifetime offer”, then take it as an indication that the individual/company is pressurising you. STOP. 2.    Do not invest in something you do not understand and never sign contracts or documents you have not read carefully. (Watch out for poor grammar and spelling). 3.    Research the company that is calling you. Get their contact details, physical address and try and visit them. A website is not necessarily proof that the company exists and is legitimate. Many of these companies are “fronting”. Check with the FSB if they are authorised to conduct business in SA. 4.    Don’t be secretive about the offer that has been made to you. Get the opinions of your children, friends, and neighbours. This will make them aware if it is a scam and what to do if they get called as well. They might also be able to warn you if they have knowledge of such a scam. 5.    Keep your private information private. Do not divulge too much information about yourself or your life situation over the phone. Professional scam artists use emotional coercive tactics to get your money. Do not respond to emails, SMS or phone calls requesting your personal information. 6.    The internet has introduced a new platform for scam artists and they use bulk email communication widely.  You have most likely received an email offering you an inheritance of millions of Rands; if you have responded then you would have learnt that all you had to do was deposit a certain amount of money to a bank account to release the funds. What about lottery scams, you get an SMS informing you that you have won billions of euros in the Euro lottery, however you have never played the lottery. Many of us have even received an email to verify our banking details. Your bank will not ask for your bank card details via email, telephone or SMS. Scam baiting, email spoofing, phishing, and requests for financial help are considered to be email fraud and this is just the tip of the iceberg.   Other types of scams   JunkMail is a South African local classifieds newspaper which has an online presence. They have issued a number of blogs about scams namely; “The Top 10 scam types in South Africa”, “Scam Prevention Tips” and “Top 10 worst scams on the internet”.  These scams include the 419 Nigerian scam, phishing, smishing, false payment confirmations, unethical app download charges, SIM swops, credit card skimming, unscrupulous subscription services, counterfeit merchandise and the Microsoft scam. You can read more by clicking on the following link;   Other scams that you should be aware of are; ·       the advance fee scam (pay upfront for your item); ·       auction/rental fraud, identity theft (someone using your identity to purchase items); ·       disaster relief (donate money to hurricane victims); ·       online dating (fraudsters play on the emotions of single men and woman to get money); ·       rogue software (you are asked to download software which is free however this software acquires personal information from you and gives it   to the scam artists); ·        travel and vacation scams (you look for holiday accommodation and made payments upfront only to find out that the place does not exist); ·        prescribed drug scams; ·        festive time scams, ·        work from home scams (require you to package letters that you have to post to various persons on a list; ·        surveys and competitions; ·        tax rebates (SARS would like to pay you your return money and needs you to log into your banking about. SARS will not do this);  and ·        charity scams (play on the emotions of people and getting money for charities or sick animals, only there are none) Click on the following    link for more information Who can I call to verify if a company is authorised to sell financial products?   Consumers are encouraged to check the person or company they are purchasing a financial product or service from is authorised to sell or render the financial service.  Phone the FSB’s call Centre on 0800202087 / 0800110443 to check whether the entity you are dealing with is an FSP and whether they are authorised to sell the financial product or render the financial services you are buying.  I want to report a financial crime, who do I contact? To report a suspicion of money laundering or terror financing activity or transaction, go to Alternatively, if you are unable to make a report electronically, please fax the report to (012) 641 6438 or post to Private Bag x177, Centurion 0046.   Questions and enquiries: Financial Services Board Email: or Call toll-free: 0800 202087/0800 110443 Visit: Consumer website: Email:   Written by Alicia Pillai Web Content specialist Consumer Education Department