Telecommunications fraud is on the rise in South Africa, with the sector seeing one of the highest suspected digital fraud attempt rates globally.

In 2023 alone, 15.5% of all suspected digital fraud attempts in South Africa targeted the telecoms industry, marking a staggering 78% increase year over year. This trend highlights the magnitude of the issue and emphasises the critical necessity for the industry to bolsters its defences.

South Africa’s telecoms sector is one of the fastest growing in the country. The number of mobile connections in South Africa increased by 4.2 million (3.7%) between the start of 2023 and the start of 2024. The Covid-19 pandemic accelerated the sector’s shift online as customers moved to digital channels for critical transactions, such as new contracts and upgrades, that were once conducted in-store. While convenient, this rapid shift left security gaps, and fraudsters have been quick to exploit them.

Indeed, fraudsters are constantly evolving their tactics to exploit new weaknesses. While telecoms companies are investing heavily in security and consumer education, the rapid expansion of digital services can make it difficult to stay ahead.

The methods fraudsters use are becoming increasingly sophisticated. Many fraudulent accounts, an estimated 3% of new digital accounts in telecoms, are created using stolen or synthetic identities. Criminals use techniques like phishing, smishing and vishing to trick consumers into divulging sensitive data, which is then used for identity theft, Sim swaps and even bypassing multifactor authentication.

A compromised telco account is often the first step in a chain of digital fraud attempts. For instance, a Sim swap can give fraudsters access to one-time Pins (OTPs), allowing them to breach online banking accounts and execute large financial transactions. The implications are significant: beyond financial losses, businesses face reputational harm that can erode consumer trust in digital services.

Consumer concerns

According to TransUnion’s 2024 State of Omnichannel Fraud Report, 54% of South African consumers reported being targeted by fraudsters, and many are responding by stepping back from online shopping. The report shows a decrease in e-commerce engagement from 45% in 2021 to 34% in 2023. Concerns about data security have even led 40% of consumers to abandon online purchases mid-checkout.

Every digital interaction has the potential to be a target for fraud. When customers feel their security is compromised, trust can be eroded, leading them to reconsider the channels they use or even switch to other brands.

Read: ‘Data incident’ at Standard Bank sparks full-scale probe

To protect consumers and rebuild trust, telecoms providers must enhance digital defences and further invest in continuous education campaigns that empower consumers. Practical tips, such as avoiding unknown links and regularly updating passwords, are critical in thwarting social engineering attacks.

But the solution also demands a coordinated industry response. Companies should consider sharing data on fraud tactics and trends across sectors, as fraudsters tend to move rapidly between similar targets. Enhanced collaboration, both locally and internationally, will be key to staying ahead of increasingly agile cybercriminals.

The best defence is a unified approach. By working together and using advanced, data-driven fraud detection technologies, we can outpace fraudsters and create a safer digital environment for all.

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As South Africa’s digital economy continues to grow, the telecoms industry has both a responsibility and an opportunity to lead in building secure digital ecosystems that consumers can trust. Through a combination of robust security, industry collaboration and consumer education, the sector can tackle this escalating threat head-on.