As real-time payments rise, so do scams, with 70 percent  of South Africans saying they have received a message they thought  was a scam.

Customers are overwhelmingly adopting real-time digital payments like MoneyGram and banking apps, but with new payment channels comes an inevitable rise in fraud. In the case of Real-Time-Payments (RTP), criminals are becoming increasingly crafty with scams, and consumers are unwittingly sending their hard-earned money to fraudsters.

A new survey by leading analytics software firm FICO showed that 91 percent of adult South Africans said they had sent a real-time payment (RTP), 92 percent had received an RTP, and 90 percent will maintain or increase their use of RTP over the next year. However, 64 percent of respondents said friends or family members have been victims of scams. 19 percent of respondents said they had paid for investments, goods, or services they never received.

More highlights from the survey:

• 70 percent of South Africans got an unsolicited text, email, phone call, or other outreach they thought was part of a scam
• 81 percent of South Africans think banks should have better fraud detection systems
• 79 percent would feel positive if a bank stopped them from making a suspected scam payment

Since RTP don’t typically have the same level of consumer protection as a credit card payment, educating customers about the nature of RTP (instant, irrevocable, not eligible for reimbursement) as well as regular updates about prevalent scams, with the need to exercise care and due diligence can help reinforce the bank’s role as a guardian of the customer’s accounts.

“Banks need to proactively help consumers by deploying AI and machine learning to help identify and quantify the probability of an individual transaction being related to a scam,” said Michelle Beetar, vice president and managing director for FICO in Africa. “Two-way, direct, personalised, customer interactions in the channel of customer choice can help too, by enabling the consumer to think before they act. Prompt resolution can help keep scam victims satisfied, reducing customer churn and support costs.”

Communicating About Scams

South Africans prefer notifications on scams to be delivered in their banking app at 37 percent, the second highest in the FICO global survey. This shows a high level of sophistication among consumers and a high level of trust in bank app security. Moving customer notifications, and customer engagement generally, into the bank app provides a much more secure and trusted experience.

Using proactive personalised, two-way communication capabilities that are directly integrated into a scam detection solution can help facilitate immediate notification of potential scam activity, reducing the likelihood of a customer losing money to a criminal. Best-in-class communication capabilities will also support the other channels consumers use, including phone, text/SMS, email, together with newer over-the- top (OTT) messaging platforms such as WhatsApp.

Who Is Responsible for Losses?

The survey also revealed consumers’ mindset about who should be responsible if they fall victim to a scam. 56 percent of South African adults think they are ultimately responsible if they send a payment to a scammer. While this is slightly higher than the global average (50 percent), it indicates that individuals are aware of some of the implications of RTP. But a high percentage of consumers still think that both initiating and receiving banks have a high degree of responsibility for scams. Up to 15 percent of the respondents would change banks if they were a scam victim and were not satisfied with the bank’s response.  

“By incorporating scam-specific analysis and scoring for individual transactions, as well as comprehensive decisioning and intervention capabilities throughout the customer lifecycle, banks can help identify and stop scam payments before customers have lost any money,” said Beetar. “Banks should take advantage of predictive models that can quickly and accurately detect scam high-risk payments, then implement automated actions and outreach to inform and help protect the consumer. Receiving banks can use linking and matching capabilities to identify fraudulent applicants and prevent criminals from opening accounts to facilitate receipt of these payments. They can also use these same capabilities to identify potentially fraudulent accounts already on the books and flag them for monitoring or apply step-up treatments to root out and close them down.”

In many global markets, there is a regulatory push for banks (both depository and receiving) to be held liable if customers are victims of scams that involve authorized push payment/authorized user fraud. In South Africa, 29 percent of respondents said they think a bank should always refund a scam victim, while another 38 percent think they should be refunded most of the time — a significant majority at 67 percent.

“Banks risk reputational damage and potential regulatory action if they fail to compensate victims for scam losses,” said Beetar. “In this case, the best defence against loss liability is preventing loss in the first place! Putting the right transactional monitoring and scam detection capabilities in place can help keep customers safe before any loss ever happens.”

FICO’s online survey was conducted by an independent research company adhering to research industry standards. 1,000 South African adults were surveyed, concluding in January 2023. This was part of a project surveying more than 14,000 consumers in 14 countries, including Brazil, Canada, Colombia, Germany, India, Indonesia, Malaysia, Mexico, Peru, Philippines, Spain, Turkey, and USA. FICO has industry-leading fraud management solutions, including an award-winning scam detection model.