Recent Southern African Fraud Prevention Service statistics paint a concerning picture, reporting a 32% increase in fraud incidents and a staggering 54% rise in impersonation fraud victims compared to 2023. Although October may have been Cybersecurity Month, the reality is that investors need to remain vigilant every month against the rising tide of digital fraud.

René Basson, Head of Brand at Satrix, warns, “The digital landscape has become a hunting ground for sophisticated scammers. They’re not just after your personal information; they’re targeting your hard-earned investments. Globally, we’re seeing increasingly clever tactics, from fake investment platforms to impersonation of financial advisers on social media. Investors must arm themselves with knowledge and exercise extreme caution, especially when encountering investment opportunities online.”

Social media is a double-edged sword for investors

Basson says that while social media platforms have become valuable resources for investment tips and financial news, they’ve also opened new avenues for fraudsters. “Social media is well and truly integrated into our daily lives. However, investors need to stay alert, considering the increasing number of scammers taking to social media. Often, the scams are so believable it’s easy to be deceived.”

The Association for Savings and Investment South Africa (ASISA) also recently warned that investment companies have seen increased fraud via social media channels. “Fraudsters have even taken to imitating key personnel by using their profile photos and company logos. If you receive a request for financial assistance from a family member or friend via social media, contact that person directly to ensure they are the person you’re communicating with,” adds Basson.

Protecting your digital financial footprint

Basson offers these critical tips to help South African investors safeguard their investments and personal information:

• Strengthen Your Passwords: Strong passwords are non-negotiable. Use at least 10 characters comprising a combination of upper and lowercase letters and special characters such as & or @. Use different passwords for different investment websites.
• Embrace Two-Factor Authentication: Two-factor authentication offers additional protection. A thief would need both your devices (cell phone and laptop) to access your account.
• Keep Software Updated: Investors should regularly update and install anti-virus software on all their devices.
• Avoid Public Wi-Fi for Financial Transactions: Never use public Wi-Fi to perform financial transactions.

Timeless investment principles in the digital age

Basson emphasises the importance of adhering to fundamental investment principles when evaluating investment opportunities online. “As always, there are timeless truths regarding investing, and they apply equally to social media. She says investors should keep the following in mind when considering investment-related content on social media:

• Understand What You’re Investing In: If you can’t articulate it, don’t invest in it. Does the investment suit your risk profile? Will you have to tie your money up for a certain period, and if you do, for how long? Who is offering the investment, and is it regulated? The FSCA website lists all entities registered as authorised financial product providers.
• Research and Ask Questions: Review their website after confirming that the company is authorised to sell the product. Do they provide contact details, and are they transparent about providing information on the company and its investment professionals? A Google search may also highlight the company’s incidents.
• Don’t Be Pressured into Investing: Take your time to read through everything, understand the investment, read the fine print, and understand how the investment will fit into your overall portfolio. Only invest when you feel ready. Someone pressuring you into investing or providing your details is a warning sign. Scammers often use this tactic.
• Trust Your Intuition: Trust your instincts if they tell you something about the social media post or investment isn’t right. Get advice from an authorised financial adviser before proceeding with the investment.
• If It Sounds Too Good to Be True, Beware: Promises of high returns are warning flags – especially when markets are struggling – including promises of returns within a short period.

Verifying legitimate investment platforms

Basson cautions investors to be particularly careful when interacting with investment firms online. “At Satrix, for example, we operate a DIY platform. We never initiate contact about investments or request personal details via phone, SMS, or WhatsApp. If someone claiming to be from Satrix does this, it’s a scam.”

She advises investors to double-check they’re on investment companies’ official social media pages before engaging or sharing any information. Investors can do this by visiting the company’s official website and following links to their verified social media accounts.

What to do if you’ve been scammed

Basson advises investors who have fallen victim to an investment scam to report the incident to the police immediately and alert their bank. Quick action can sometimes mitigate the damage.”

“Satrix is committed to empowering South Africans to take control of their financial future by making investing as widely accessible and secure as possible. So, take the time to review your online investment practices and strengthen your digital defences. Your financial future may depend on it,” concludes Basson.

Disclaimer

Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. Satrix Managers is a registered Manager in terms of the Collective Investment Schemes Control Act, 2002.

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. 

For more information, visit https://satrix.co.za/products

A version of this article was first published here.