A new study by South African-founded research platform Yazi has found that 85% of South Africans were affected by fraud in the past year. The study, which gathered 1,234 responses from South Africa and the UK, revealed that one in five South African respondents had lost money to fraud. This is in stark contrast to the UK, where only 7% of respondents reported losing money to fraud. The study highlights the severity of the issue in South Africa.
Despite widespread awareness of common scams, many South Africans still fell victim to fraud. The study found that 74% of South Africans already knew that AI could be used to clone voices and create fake messages. However, this awareness did not translate to cautious behaviour. Almost half of the scam attempts reported in South Africa began with the promise of making money. This suggests that financial pressure may be a significant factor in making consumers susceptible to scams.
The financial consequences of fraud were particularly severe for low-income households. The median loss among victims from the lowest-income households amounted to 40% of one month's household income. Furthermore, three-quarters of South African fraud victims recovered none of the money they lost. This highlights the need for stronger measures to protect consumers, particularly those in vulnerable financial situations.
The study also found that 64% of affected South Africans suspected bank or institutional staff might be involved in fraud. This is in contrast to only 17% of affected respondents in the UK. Despite this, 47% of South African respondents reported incidents to an institution. Yazi described this as a reporting paradox, suggesting that consumers continued to report fraud because institutions offered their most realistic route to recovering lost money.
Self-blame was also a significant barrier to reporting fraud. Among those who did not report incidents, 24% of South Africans said self-blame was a factor, compared with 3% of respondents in the UK. Maya Fisher-French, founder of Maya on Money, said the findings should concern financial institutions. She emphasised that the high level of suspicion towards bank staff complicity in fraud was a significant issue that needed to be addressed.
The study highlighted the impact of fraud on businesses, including small and medium-sized enterprises (SMEs). Businesses whose payment systems were used to move stolen money could also suffer consequences. Dewald Müller, head of SaaS and AI at Stitch, noted that stronger fraud prevention measures were needed, including improved detection technology and behavioural monitoring.
The findings suggest that consumer education alone may not be enough to address fraud. Yazi chief executive Tim Treagus said that fraud awareness alone was insufficient to protect consumers. The study calls for stronger security measures and greater institutional accountability to protect consumers. One participant described the emotional consequences of being defrauded, saying it made them feel like they were no longer safe.
Key points
- 85% of South Africans were affected by fraud in the past year.
- One in five South African respondents had lost money to fraud.
- Consumer education alone may not be enough to address fraud.
