South Africa has over 190,000 active online traders and this number is growing rapidly. Today, most people see trading as a means of getting easy money and are not aware of the sophisticated methods online scammers employ to defraud people. No trader likes the thought of being scammed but it’s a risk they face and they need to know what to do if they ever get scammed while online trading.
A lot of people have already been scammed and most of them are very educated people. Some of them don’t report the scam for reasons such as the amount lost being negligible, they thinking it would not change anything, wanting to forget it ever happened, being too ashamed to admit they were scammed, and not knowing which authority to report to.
Not doing anything after you have been scammed is not a good idea as the scammer could go on to scam other people, and launch repeat attacks on you. When you report that you have been scammed, the scammer’s name is added to a watch list and database that is shared by several law enforcement agencies working together.
Several complaints from different people about the same scammer will cause law enforcement to treat the case more urgently. If you ever find out you have been scammed while trading online, the first line of action is to secure your account and stop further loss of funds and secondly to report the scam and move for recovery.
Securing your account after you have been scammed
- Block all payment cards:
If you have exposed your credit or debit card details to a scammer, you should block the cards immediately by contacting your Bank on their hotline. Some banks have USSD codes for blocking debit cards from your mobile phone. You can block and apply for a new card.
Some Banks offer virtual cards which could be used for online transactions only. You transfer just the amount needed from your main account to the virtual card and then transact. This limits any loss to just the amount in the virtual card.
- Disable your entire account:
If you have cause to believe the scammer has access to your bank account and has made unauthorized withdrawals, you could immediately contact your bank to deactivate your account and place all funds in your account in suspense. Banks also have USSD codes for account deactivation which you could dial from your mobile phone.
- Change your passwords:
After a scam, immediately change your trading account password and any other compromised passwords to a stronger one. A strong password should always be alphanumeric, and contain special characters.
If you have used your trading account password on another App, also change it there as the scammers could try the password on other Apps, they think you might be using.
- Gather your evidence:
All receipts and correspondence between you and the scammer should be kept safe to be used as evidence. When you are pushing for fund recovery, the receipts will be tendered to law enforcement to fast track the recovery of funds.
Reporting a scam
Reporting a scam will depend on the nature of the scam. The following are some possible scenarios:
- Scammed by Unknown Persons/Entity:
If you have been scammed by an unknown person/entity online or offline who had provided you with fake details on their creditability and you entrusted them with your funds. Common scenarios would be you got scammed via fake investment scheme online/offline or some phishing website which guised as a genuine financial service or someone scammed you by exchanging impersonating emails or someone got your sensitive financial data via phishing or hacking attack.
Then, you must immediately contact the law enforcement agencies like South African Police Services (10111) and financial market conduct regulator FSCA for help.
You should also report to the Financial Intelligence Centre (FIC) in South Africa via their website: www.fic.gov.za/secure/reports.aspx and phone number +27 12 641 6000.
Additionally, you must also contact your bank to file for blocking/reversal of transaction; a copy of complaint with law enforcement agency and evidence would help fast track the resolution.
Moreover, organizations like: South African Fraud Prevention Service could help you.
If this involves international jurisdictions, you could also contact the federal trade commission in the USA by visiting their website https://econsumer.gov/ to lay your complaint. The FTC works in conjunction with several law enforcement agencies to track down and resolve fraud cases.
- Scammed by an unregulated or offshore broker:
To operate in SA, all financial services providers have to obtain a license from the FSCA. These licenses vary depending on the services they offer and you can verify the licensed operators from FSCA’s List of Regulated Entities and Persons.
According to Safe Forex Brokers SA, “There are dozens of unauthorized forex and stock brokers that operate in South Africa which operate through offshore licenses which makes traders susceptible to scams.”
An unauthorized broker could operate without any license in SA and in this case the FSCA is not in the picture since such brokers are not under their authority. And you have no recourse in case of fraud or wrong doings by such broker.
But you should still contact FSCA so that other investors are protected from such frauds as FSCA can issue a warning. You could also contact law enforcement agencies like the Police and FIC.
You could also leave online reviews against such brokers so other traders are warned against them.
- Scammed by a FSCA regulated FSP:
Although less common, there are still some cases of fraud by regulated entities.
The Financial Sector Conduct Authority (FSCA), is the Capital Market watchdog and it licenses & oversees all financial service providers (FSPs) in South Africa. These FSPs include brokers so if you are scammed by any broker holding an FSCA license please report to the FSCA via their website or send a mail to: info@fsca.co.za You can also reach the FSCA on their contact centre’s telephone number 0800 20 3722
If a broker is found to be fraudulent, the law empowers the FSCA to suspend the brokers’ license and apply to a court for liquidation of the brokers assets.
- Scammed by a regulated international broker:
Some online brokers in SA hold licenses from other countries and they are answerable to the capital market regulators in those countries.
If you are scammed by any international broker, go to their website and find out the regulatory body that licensed them, then go to the regulators website and leave a complaint via email addresses that will be displayed on the website. Telephone numbers will also be displayed on the regulator’s website so you can even put a call across to them to lay your complaint.
Recovery of funds
If the payment was made using a debit card or credit card, you should immediately file a chargeback with your bank with evidence and information on the incident.
A bank will normally give you a form to file the chargeback after which they send the request to the card provider like Visa or Mastercard with the reason for chargeback. Normally, you could claim a chargeback within 120 days of the transaction. If your bank has not provided you with a response or assistance within 20 days of filing a complaint you can contact “Ombudsman for Banking Services” for help.
For bank payments, if the scammer sends the money to accounts domiciled outside South Africa, such international transfers may go through intermediary banks so if you place a request to recall your funds fast enough, there may be a chance that you could get your money back. If you report the case late but the scammer’s account is still funded, the Bank could reverse the money but if the scammer has used the money, it will take longer to refund.
Plus, you may need to get a court order asking your Bank to recover the funds from the scammer as this will make the Bank take your case more seriously. Keep proof that you have asked your Bank to recall the funds as evidence.
If you send your Bank an email, or write them a letter, let them acknowledge receipt and you file it as proof. These would be helpful to pursue your case with law enforcement agencies, court and banking ombudsman.
If you have already filed a complaint with a law enforcement agency, this would also help fast track the recovery as they would obtain an order on the recovery of the funds.
If you paid the scammer via a gift card, do not misplace the card. Keep the card as evidence while you quickly get in touch with the gift card issuer and tell them to block the card and funds as it was used in a scam.
If the scammer is outside SA and you paid the scammer via international money transfer operators (IMTOs) such as MoneyGram, western union, etc. you could quickly ask them to recall the transfer and refund your money stating fraud as your reason. Western union email address is westernunion@emails.westernunion.com and MoneyGram can be contacted on telephone 001 347 6961234 and email address customerservice@moneygram.com
For wire transfers to parties outside South Africa, it is less likely recovery would be possible once it has completed as it involves international jurisdictions and international banks would only work on request of law enforcement agencies with proper evidence of fraud. In such cases, the local law enforcement agencies have to coordinate with international law enforcement agencies on recovery of funds by getting trail of the funds and stopping further transfer of funds.
You could also contact organizations that specialize in fund recovery for help.
You need to be patient
After tendering all your evidence you need to give the relevant agencies time to investigate. Recovery of funds can be tricky because the scammer could use your funds to buy cryptocurrency thereby further complicating the recovery process.
Scammers could be based in a different part of the world and different jurisdictions where laws that apply may be different so this could make the recovery process lengthy. Catching a scammer and recovering the funds are not the same thing so the entire process could take a while to play out.
You also need to approach the right places for help in fund recovery. The process of fund recovery could be another scam as some scammers pretend to be fund recovery specialists only for them to ask for an advance fee. Once you pay the advance fee, they will keep asking for more money and when you can no longer meet up, they severe contact with you.
Authentic fund recovery organizations will wait till the fund is recovered then they take their fees. Fees should be taken after successful recovery of funds and not before. Only use fund recovery agents that have a track record of positive case resolution dealing with cases similar to yours.
Key Takeaway
When you lose funds to scammers while trading online, you should not be ashamed to admit it. Even educated people get scammed. First thing is to secure any funds left in your account by blocking your cards and account, then you gather your evidence, report the scam to relevant authorities such as FSCA, FIC which will be followed up by fund recovery. You may not get all your money back but it’s still better than losing everything.
