Schemes and Scams

Both these scams involve the use of altered or fraudulent internet payment confirmations or fake SMS payment notifications to trick you into believing that a payment was made into your account.

With a deposit scam, fraudsters ask you to release goods or to provide a service based on the fraudulent proof of payment that you’ve received.

With a refund scam, fraudsters ask you to return an ‘incorrect payment’ or ‘overpayment’ based on the fraudulent proof of payment that you’ve received.

Tips

• Never rely on a proof of payment alone. Always double-check that the money shows in your account before you release goods or provide services.
• Look out for little errors on your proof of payment or possible changes, alterations, alignment and spelling or grammar errors. These are often signs of fraud.
• You can use Nedbank’s Verify Payments service to confirm that an incoming payment notification from a Nedbank account is legitimate, and that the money is indeed on its way to you.
• Use bank-approved beneficiaries if possible.

Many people date online, and there are success stories. But there are also horrible cases of unsuspecting victims losing their life savings. Online scammers share lots of personal information with you in the hope of gaining your trust when their profile details and pictures are actually fake and used repeatedly in scamming other victims.

How it works

• They say they want to buy you an expensive gift but that you will need to pay import duties or taxes to receive it.
• They claim to have a business or family crisis and ask you to help them out by sending them some money, promising to pay you back.
• They ask you to help pay for the travel costs to visit you. They even send you copies of fake travel documents to prove they’ve booked the trip, but then never arrive.
• They propose to you online but then ask you to help set up your new home together by sending them money.

If you don't give them money, their messages will often become more desperate and persistent. If you give in and pay them the money, they may either disappear or ask you send them more money.

Tips

• Be careful when you share personal information on social networking sites. Fraudsters use this to steal your identity.
• Watch out for people with extraordinary jobs who are always travelling to new places, for example people who claim to work for the army, navy, air force etc.
• Look out for emails with copied and pasted words or letters that differ in fonts and sizes. Or when people say, ‘Hi, Beautiful’ instead of using your name. Fraudsters target lots of people at the same time with the same messages.
• Check if what they’re saying relates to your last conversation. Syndicates use different people to run dating scams, so you could be chatting to two or three different people who are sending bulk messages.
• If you arrange to see someone you met online, meet in a public place and take a friend with you.
• Beware of people who keep promising to meet you but always cancel at the last minute.
• Never send money to anyone you’ve met online only.
• If you suspect that you are being targeted by fraudsters, stop all communication immediately and report it to the online dating service.

A multilayered marketing structure, like a pyramid scheme, isn’t always illegal. There are businesses that use pyramid structures to promote and sell their products, for example cosmetic and health product suppliers. These schemes are not illegal, as a product is exchanged for money at fair value.

A pyramid scheme is illegal when you are required to make a deposit for no product or a product without a fair value of exchange. This is in contravention to the Banks Act, which has specific rules linked to the accepting deposits.

How to identify an illegal pyramid scheme

• Fraudsters offer you exceptional high returns and your returns increase with the number of people that you recruit to the scheme.
• They ask you to make an initial start-up deposit as an investment into the scheme.
• They ask you to recruit others in return for bonuses.
• The scheme has multiple levels of members, all collecting commission on a single transaction.
• The scheme isn’t authorised by or registered as a financial services provider.
• If it sounds too good to be true, then it probably is. Stay away!

A Ponzi scheme is always illegal. This is a scheme that is operated by fraudsters who con people into investing their hard-earned money in a business venture or an investment that promises high returns in a short period of time. This scheme uses the money of new investors to pay returns to older investors. Once recruitment slows down, the scheme starts to collapse.

How to identify a Ponzi scheme

• They promise abnormally high investment returns, higher than those offered by financial institutions (30% and more).
• They often promise guaranteed returns. No return is ever guaranteed. All investments carry some risk.
• Make sure that you understand what you’re investing in and be wary of too-good-to-be-true business models. If you don't understand the business model, don't invest.
• The scheme owners will try and pressurise you into reinvesting your profits as they need these profits to pay other people’s returns.
• Only invest your money with credible FSB-registered institutions that you have researched properly.
• You will usually be introduced to the scheme by friends or family members who have made some money. They use this marketing ploy as you tend to trust family and friends, but remember, they need to recruit new members to pay interest to older members.

Like pyramid schemes, Ponzi schemes hide the true source of funds behind multiple transfers between different accounts. Members’ bank accounts are used to channel money so that the scammers cannot be linked to the transactions. But although you are unaware of it, you’re guilty of money laundering, because as a member, you allowed your bank account to be used to channel these funds.

Tips

• Be careful of investments that guarantee you high profits, with little or no financial risk.
• Understand what you’re investing in and beware of business models that are ‘too good to be true’. If you don't understand the business model, don’t invest. 
• Know exactly where the money will be invested and do a background check on brokers or products before investing.  
• These schemes operate on trust, so places like churches, social groups and community organisations are ‘happy hunting grounds’ for recruiting members. Rely on research over positive reviews and referrals from friends and relatives. 
• Look out for short investment periods, sometimes as little as 10 days, with very high return rates and strong encouragement to reinvest automatically.
• Only invest your money with credible FSB-registered institutions that you have researched properly.