Rise of 'money muling', a costly gaming purchase & car insurance advice: Consumer watch-outs of the week

In this weekly segment of bite-sized chunks of useful information, consumer journalist Wendy Knowler summarises news you can use.

This is how fraudsters take your money and run

Money muling incidents increased by a whopping 62% in the year up to the end of April 2023.

The term refers to someone agreeing to a fraudster using their bank accounts — for a fee — thereby allowing the latter to evade detection.

“It is concerning that fraudsters are getting more brazen and that the level of certain fraudulent activities is increasing rapidly,” says Manie van Schalkwyk, CEO of the SA Fraud Protection Service (SAFPS).

The repercussions of being a money mule are significant, he warned.

“The guilty party will be listed with the SAFPS and the result is that they could struggle to get access to finance for 10 years.

“It is one of the biggest issues the SAFPS is currently facing, and it is important for the public to know about the seriousness of this crime.”

To put the money mule risk increase into perspective, in 2021, money-muling only comprised 22% of the fraud incidents reported to the SAFPS. This increased to 35% in 2022 and 43% in the first four months of 2023.

Also running rampant is impersonation fraud — those incidents have increased by 356% in the past year, thanks to data leaks and compromised personal data, which has shown a significant recent increase in South Africa.

According to a 2021 Interpol report, South Africa tops Africa in cyber threats and is third in the world, with 230-million threats detected in 2021. Of those, 219-million were related to e-mails, Van Schalkwyk said.

The SAFPS fraud statistics reveal that Gauteng is the country's fraud hotbed, with 66% of the fraud incidents reported to the SAFPS coming from South Africa's economic heartland.

KwaZulu-Natal made up 17% of the incidents and the Western Cape 8%.

The good news is the SAFPS has launched two new fraud-thwarting platforms.

Yima is a website consumers can use to report scams and find out whether a site you want to visit is genuine or a proxy website. It’s also a platform for consumers to share their fraud stories. Go to yima.org.za.

The SAPFS’s subsidiary company, Secure Citizen, has developed the functionality for consumers to validate buyers and sellers when performing a transaction, thereby minimising the threat of fraud. Secure Citizen is available through www.securecitizen.app or the mobile app, which is available on the Google Play Store and Apple App Store platforms.

If you haven’t already, go to www.safps.org.za , click on the fraud prevention tab and protect yourself against identity theft with Protective Registration. Best done on a smartphone.

How do you know it’s OK if it’s still in the box?

Trickery, trickery everywhere: online and in store, you really have to be on your game to avoid being cheated.

A father has e-mailed me about his son’s awful gaming computer purchase experience. He spent R8,000 on the computer at a Cape Town store after the slick salesman had opened the box for him to view the screen, and then required him to sign a form confirming that it was defect-free.

“The screen was not switched on at the time,” she said. “It was simply viewed in its box.”

When he got home, he removed the screen from the box, connected it and switched it on, only to find that a third of the screen was dead.

“He immediately contacted the sales person to inform him of the issue and returned the screen in its original packaging the next day,” she said.

The screen was sent away for technical assessment, and a few days later the young man was presented with a report stating that the screen was damaged “after sales”.

The computer retailer is now refusing to honour the Consumer Protection Act’s six-month warranty.

Firstly, the fact that a product looks fine when you buy it does not mean that there isn’t a latent defect which becomes apparent within six months of purchase, entitling you to return it for your choice of a refund, replacement or repair.

Secondly, if you’re being made to confirm that an electronic product is working fine, insist that it is removed from its packaging and switched on before signing that document. Assuming that chap didn’t wet or drop the screen, I’ve suggested that a second opinion on that alleged “after sales damage” be sought.

Don’t tell your insurer your car is for personal use if it’s not

Luvuyo’s experience covers a couple of issues that cause many motorists to come horribly unstuck.

“My nephew just had an accident — he had the right of way and the other driver admitted driving through a red traffic light.

“He is under my insurance and is registered as a regular driver of the car, but the insurer rejected the claim stating that he used the car to ferry paying passengers despite it being insured for private use.

“They received this information from Bolt, with my consent.

“But what material difference is the fact that he has paying passengers with him? What if they were not paying?” he asked.

The second problem relates to his contract with a tracking company.

“The car has been written off and the company is now demanding that I pay them for the remainder of the 36-month contract period, even though the car has been written off and I cannot receive any benefit from the payment. Is this correct according to the CPA or any other law?”

Failing to disclose that an insured vehicle is being used for business purposes, especially as an e-hailing taxi, will certainly lead to a rejection of any claim.

The insurer will argue, quite rightly, that they were not covering vastly higher risk of a vehicle covering the far higher mileage a taxi service permanently requires, at odd hours and sometimes in questionable areas. The risk of your nephew driving the car for personal reasons, and operating it as a Bolt driver are vastly different, the latter being far greater and thus carrying a higher premium. As a Bolt driver he’d be on the road virtually all the time, hence for that reason alone the risk is higher, plus more driving at night. So the insurance company was within its rights to reject the claim on the basis of non disclosure.

As for the car tracking issue, unfortunately he remains liable to the terms of that 36-month contract he signed with the company, whatever happens to the car. He can cancel, giving the company a month’s notice, but it will impose a cancellation penalty linked to the number of months left on the contract, which could be significant.

The other option is to pay the company to have the device removed from the written off car and transferred to another vehicle, but that’s only possible before the written-off car is sold at auction.

GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.

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