Digital fraud soars in South Africa: Key insights from TransUnion's analysis

Discover alarming trends in digital fraud in South Africa, as TransUnion reveals that nearly 5% of online transactions are flagged as fraudulent. File photo.

Discover alarming trends in digital fraud in South Africa, as TransUnion reveals that nearly 5% of online transactions are flagged as fraudulent. File photo.

Published Oct 30, 2024

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In the first half of 2024, a significant 4.9% of all digital transactions attempted by consumers in South Africa were flagged as suspected digital fraud, according to a recent analysis by TransUnion.

The report highlights that the telecommunications, financial services, and online communities—such as dating sites and forums—experienced the highest rates of suspected fraud during this period.

TransUnion's findings position South Africa as having the eighth highest rate of suspected digital fraud among 19 countries analysed, underscoring the growing challenges of online security in the region. Alarmingly, about 59% of South African consumers reported being targeted by various forms of fraud—such as email, online scams, phone calls, or text messages—in the three months leading up to Q2 2024, a figure that rose to 60% in Q3.

These insights are part of TransUnion’s recently released H2 2024 Update to the State of Omnichannel Fraud Report, which provides an overview of fraud trends from January to June 2024. The report emphasises that while many sectors are vulnerable to digital fraud, certain industries are particularly at risk.

Industry-specific fraud trends

The analysis identified the following sectors as having the highest rates of suspected digital fraud attempts in South Africa during the first half of 2024:

  • Telecommunications: 8.0%
  • Financial Services: 5.5%
  • Online Communities (e.g., dating, forums): 5.1%

Globally, the communities sector reported the highest incidence of suspected digital fraud, with an astonishing 11.5% in H1 2024. TransUnion found that profile misrepresentation—where users post false information or use fake photos—was the most common type of fraud encountered in this sector across the globe.

New account fraud: A growing threat

Digital fraud can manifest at various stages of the transaction process, posing significant risks, especially in online account openings. TransUnion's survey revealed that over two-thirds of business leaders indicated that at least 25% of new account openings in their organizations occur online. In South Africa, 5.1% of attempted digital account logins and 2.9% of account openings were suspected of being fraudulent.

Moreover, the analysis highlighted that synthetic identity fraud—the fabrication of identities using personal information for financial gain—was the fastest-growing type of digital fraud reported to TransUnion, surging by 153% from H2 2023 to H1 2024. Additionally, electronic fund transfer fraud saw a notable year-over-year volume growth of 113%. Despite these trends, promotion abuse emerged as the most common type of fraud globally, accounting for 3.6% of all reported digital fraud.

The Path Forward

Amritha Reddy, senior director of fraud solutions at TransUnion South Africa, emphasized the need for businesses to adopt advanced fraud prevention technologies. “Despite the good-faith efforts made by global organizations to identify and prevent fraud, fraudsters continue to evolve. Businesses should leverage identity verification, IP intelligence, device reputation, and synthetic identity detection as essential components of their fraud prevention strategies,” Reddy stated.

As digital transactions continue to rise, the findings of this report highlight an urgent need for heightened vigilance and proactive measures to combat the growing threat of digital fraud in South Africa and beyond.

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