Increase in Identity Fraud in South Africa Impacting Consumer Credit RecordsRecent statistics provided by the Southern African Fraud Prevention Service (SAFPS) reveal that identity fraud is on the increase in South Africa which is a concerning trend in a country where consumers rely strongly on credit.
Based on the year-to-date figure, 1,370 cases had been reported to the SAFPS as at the end of April 2014. There was a 16% increase of this crime from a total of 3,327 cases in 2012 to a total of 3,873 cases in 2013 and this hike looks set to continue as it is estimated that the number of incidents could exceed the 4,000 mark by the end of 2014. (Note: These statistics indicate the cases that have been recorded; the actual numbers are higher.) In South Africa, it is estimated that identity theft costs the local economy R1 billion each year.
According to the latest National Credit Regulator Credit Bureau Monitor, there were 20.64 million credit-active consumers in South Africa as at the end of December 2013 and each one of these consumers are urged to pay close attention to the threat of fraudulent activity that could affect their credit records.
One of South Africa's leading credit bureaus, Compuscan, has been keeping a close watch on the situation and is endeavouring to educate consumers and assist them in preventing the negative impact that fraud can have on their credit reports. It must be noted that as technology and access to information evolves, fraudsters are continuously changing their approach and coming up with new scams.
Comments Frank Lenisa, Director at Compuscan: "It's concerning to see that there is an increase in identity fraud. What worries us even more is that consumers are often unaware that they have fallen victim to such a crime and this could have a severe negative knock-on effect in their ability to obtain credit in future."
Every account that is opened and every credit transaction that takes place under a consumer's identity is recorded on their credit report. This report serves as a reference to credit providers which indicates to them how well consumers manage their account repayments. Often consumers only find out that they have been a victim of impersonation when checking their credit report to apply for a home loan, store finance, car finance, etc. or when their request for credit is denied.
Consumers who keep their repayments up to date may assume that they have a healthy credit record, but it is imperative to check that this has not been compromised at the hands of a fraudster. Every South African citizen is entitled to one free credit report annually according to the National Credit Act 34 of 2005, yet despite the high number of credit-active consumers in the country, only approximately 14,000 South Africans request their free report from Compuscan each year.
Lenisa continues: "It's important for credit-active consumers to keep a close eye on account activity under their name to prevent and recover from identity fraud. This is one of the steps that can be taken to protect the health of their credit records."
As a solution for consumers to easily and conveniently keep up to date with their financial standing, Compuscan has launched the first personal online credit report portal called My Credit Check (www.mycreditcheck.co.za). This is a user-friendly way for South African consumers with valid identity numbers to monitor the complete record of their financial history, their borrowing and spending, payment trends and contact details and to ensure that this information is correct. My Credit Check allows users to select whether they would like to view a once-off report or unlimited reports on an affordable three, six or twelve month subscription basis. A comprehensive alerts system that notifies credit-active consumers of any changes on their credit reports is also offered by Compuscan to those that register with the credit bureau to receive regular credit reports.
Credit-active consumers can safeguard themselves by obtaining a copy of their credit reports as regularly as possible and carefully examining every piece of information. It is recommended that this is done once a month. Consumers should also carefully examine their statements, keep their passwords and identity numbers secure and shred receipts and statements before discarding them. It must also be stressed that personal information should never be given over the phone and the authenticity of websites should be checked before entering any personal information.
If a consumer's credit report does reflect that their identity has been used fraudulently to open accounts, consumers should contact the credit providers that have listed them immediately and request a copy of the application form which was allegedly signed when the account was opened. Should this prove to be unsuccessful in resolving the matter, consumers can contact Compuscan to log a dispute free of charge. According to the National Credit Act 34 of 2005 consumers have the right to dispute any factually incorrect information on their credit report and have the information corrected. The SAFPS furthermore provides free assistance to consumers who have been victims of identity fraud.