South Africa’s telecom industry ignores consumer safety as 60% exposed to fraud

JOHANNESBURG, Nov. 2—According to the H2 2024 Update: State of Omnichannel Fraud Report, digital fraud surges in South Africa as the country’s telecommunications sector emerges as a glaring weak point, exposing consumers to unprecedented risks. Data from the first half of 2024 reveals a troubling pattern: 4.9% of digital transactions in South Africa were flagged as potentially fraudulent, with telecommunications leading as the sector most targeted by fraudsters.

With fraud costing businesses an estimated 6.5% of revenue globally, an enterprise-wide approach to mitigate risks is essential.

Fraud rates in the South African telecommunications industry spiked, with 8% of all transactions suspected of fraud, far surpassing other high-risk sectors, including financial services (5.5%) and online platforms (5.1%), according to TransUnion. While telecommunications is recognized globally as a high-risk sector, South Africa’s fraud rates are disproportionately high, highlighting a critical failure in industry practices and regulatory oversight.

Compared to 19 countries reviewed in TransUnion’s analysis, South Africa ranked eighth in digital fraud rates.

Notably, countries like Brazil and the United States, which also experience high fraud rates, have prioritized collaborative anti-fraud initiatives across sectors, resulting in stabilized fraud growth. These countries have introduced measures that involve both the private sector and government regulators, setting a standard that South Africa has yet to meet.

Specific forms of telecommunications fraud in South Africa have also escalated alarmingly:

• Synthetic identity fraud rose by 153% between late 2023 and early 2024. Fraudsters are now adept at creating fake identities to open fraudulent telecommunications accounts, bypassing weak verification protocols.
• Electronic fund transfer (EFT) fraud surged by 113% year-on-year, with fraudsters exploiting vulnerabilities in digital payment systems increasingly intertwined with mobile telecommunications.
• Promotional abuse, a global fraud type that was reported to represent 3.6% of all fraud incidents in H1 2024. In South Africa, fraudulent abuse of promotional offers within telecommunications further contributes to revenue loss and reputational damage for service providers.

Unlike the UK and the Philippines, where cross-sector cooperation has effectively mitigated fraud, South African telecom providers continue to operate in isolation. Without partnerships between service providers, financial institutions, and the government, South Africa’s sector remains alarmingly susceptible to fraud.

Despite overwhelming evidence of the rising fraud crisis, the South African telecommunications industry has failed to adopt robust fraud prevention strategies, leaving consumers vulnerable.

Approximately 60% of South Africans reported being targeted by digital fraud in Q3 2024—a slight increase from 59% in Q2. This rate of consumer targeting is one of the highest globally, underscoring a failure to protect consumers from digital threats.

The South African telecommunications industry’s fragmented approach to fraud mitigation stands in stark contrast to more unified responses in other high-risk regions.

While industries elsewhere have formed alliances for shared intelligence and response coordination, South African telecom providers operate largely in isolation, with insufficient cooperation to counteract sophisticated fraud networks.

This lack of collaboration not only weakens collective defense efforts but also leaves providers vulnerable to the reputational and financial damage associated with unchecked fraud.

The failure of South African telecom providers to prioritize fraud mitigation is increasingly detrimental to both consumers and the economy. The lack of unified, industry-wide measures opens opportunities for fraudsters to exploit gaps in protection among providers. In North America, cross-sector initiatives and public-private partnerships have proven effective, as seen in the United States and Canada. Through shared resources and coordinated anti-fraud strategies, these countries have managed to lower fraud rates significantly, contrasting sharply with South Africa’s escalating crisis.

Also Read: Could South Africa’s Cyber Crimes Act Be the Game Changer in the Fight Against Digital Fraud?

Inaction within South Africa’s telecommunications industry also risks damaging its reputation on the global stage.

Rising fraud incidents erode consumer trust and create barriers to foreign investment, painting South Africa as a high-risk market for digital transactions.

To regain trust and attract investment, the industry must adopt coordinated anti-fraud strategies, involving collaboration with financial institutions, regulators, and international partners.

South African telecom providers have masked their inaction behind self-regulation and voluntary forums, creating an illusion of information sharing. Yet the data reveals a complete industry failure. Only strict government laws and regulatory mandates can enforce transparency, reporting, and compliance standards needed to curb fraud, protect consumers, and repair the sector’s eroded integrity.