Rise in investment scams and deepfakes perpetrated by fraudsters on social media

The high number of scams that are currently being perpetrated by fraudsters via social media has prompted the Association for Savings and Investments South Africa (Asisa) to issue an urgent consumer alert.

Jean van Niekerk, convenor of the Asisa Forensic Standing Committee, says member companies have seen a sharp rise in fraud committed via social media channels in recent years. Asisa has reiterated that reputable and regulated financial services providers will never sell policies or investments via a WhatsApp group, Telegram, a social media platform, email or an unsolicited random phone call.

Jason Lane-Sellers, director of fraud and identity for Europe, Middle East and Africa at LexisNexis Risk Solutions told Daily Maverick that fraudsters are increasingly using social media by creating deepfake videos of celebrities or public figures endorsing fake investment opportunities or cryptocurrencies. A classic example in South Africa is the recent social media scam using images of Johann Rupert and Elon Musk apparently promoting a particular type of investment.

Pensioner loses R850,000 to scam using Elon Musk image

Daily Maverick has spoken to one investor who has lost about R850,000 of her pension savings to just such a scheme after she saw that it was supposedly being promoted by Elon Musk. The sad part is that she withdrew her savings from a reputable financial investment. The company concerned has offered to “give her R850,000” to continue trading on its platform “provided she does not deal with the media or the ombudsman”. This is a huge red flag as it implies the company is trying to buy her silence and she is unlikely to get actual money back in her bank account.

Read more in Daily Maverick: No con do! — here’s how to spot the scam red flags and stay safe

Lane-Sellers says fraudsters usually mass distribute deepfake videos on social media platforms to large audiences or target individuals who may have an interest in get-rich-quick schemes. “The goal is to get a small percentage of people, even as little as one to two per cent, to fall for the scam as that can still generate a reasonable profit for the fraudsters,” he says.

In the case mentioned above, the pensioner saw paper “wins” but was discouraged from taking her money out and told that she had to keep investing to earn more lucrative returns. Following this advice, her initial “investment” of R50,000 turned into a loss of around R850 000 over a matter of months.

Van Niekerk says Asisa members have shared heartbreaking examples of how financially vulnerable consumers are frequently tricked into parting with the little money they have left. “Most recently, a large asset manager alerted us to a WhatsApp scam using the profile and photo of the company’s CEO and targeting members of a support group for unemployed teachers,” he says.

CEOs unlikely to promise investment returns via social media

“When you are desperate, and you see the CEO of a big financial services company promise huge investment returns, validated by fake testimonials, it is easy to throw caution to the wind and click on a link or make an investment,” says Van Niekerk. He stresses that the CEOs of reputable companies will never promise investment returns to sign up investors or sell policies. “If you come across a group where the CEO of a financial services company appears to punt investment returns, you can be absolutely sure that this is a scam,” says Van Niekerk.

According to Van Niekerk, companies usually find out about the scams conducted in their name when desperate consumers turn to them for help once they are ghosted by the scammers after handing over the money.

“Instead of making an effort to establish whether you have been scammed once it is too late, do your homework before clicking on links or paying over money,” he advises.

Van Niekerk says while the chances of recovering your money are slim once you have been scammed, it is worth alerting the company in whose name the fraud was committed. This enables the forensics department of that company to investigate and alert other consumers. The company will also alert the industry regulatory body, the Financial Sector Conduct Authority (FSCA), which will alert consumers via the media.

If you have fallen victim to a scam, it is critical that you immediately alert your bank as well as the bank used by the scammer to receive your money via the bank’s fraud hotline, adds Van Niekerk. “If you act quickly enough, the bank may be able to help you recover your money. If this is not possible, at least the bank can take action against the scammer and close the account to prevent the scammers from targeting more honest and hardworking consumers.” DM