For the first time, the South African Banking Risk Information Centre’s annual crime statistics publication includes data on fraudulent applications for secured and unsecured loans.
The information was provided by Absa, African Bank, Bidvest, Capitec, Discovery Bank, First National Bank, Access Bank, Nedbank, Standard Bank and TymeBank.
Fraudulent vehicle asset finance (VAF) applications increased by 53% in 2021, with 20 103 reported incidents. The potential losses from these applications increased by 66%, from R4.4 billion in 2020 to R7.3bn in 2021.
However, the report said the banks’ fraud-detection systems identified and prevented “most” of the reported fraudulent VAF applications from being approved.
Gauteng, at 38%, and KwaZulu-Natal, at 24%, accounted for more than half of the reported fraudulent VAF applications.
Home loan application fraud
Fraudulent home loan applications increased by 1.6% between 2020 and 2021, with 2 785 reported incidents. The potential losses increased by 12.7%, from R3bn in 2020 to R3.4bn in 2021.
Although only 12% of the reported fraudulent mortgage loan applications were successful in 2021, actual losses increased by 47%, from R301.7 million in 2020, to R445.6m in 2021.
The report said that although the banks, in the majority of successful fraudulent applications, have some protection in the form of bonds and deed registration over the properties, huge expenses are incurred in legal and eviction costs.
Most fraudulent home loan applications occurred in Gauteng, at 38%, followed by the Western Cape, at 15%.
Unsecured loan fraud
Unsecured fraud – current, cheque and saving accounts, and personal and business loans – decreased by 4.4% from 2020, with 10 578 reported incidents in 2021.
Potential losses decreased by 40% from R403.2m in 2020 to R241.8m in 2021.
Although 94% of reported fraudulent applications were detected and declined, actual losses increased by 10.3%, from R14.6m in 2020 to R16m in 2021.
Current accounts made up 74% of fraudulent account applications in 2021, followed by credit card accounts (20%) and savings accounts (6%).
In terms of loan application fraud, 91% of fraudulent applications were personal loans, with the remaining 9% for false business loans.
Fraudulent current account applications increased by 16% between 2020 and 2021 and fraudulent personal loan applications decreased by 22%.
Most fraudulent unsecured applications were in Gauteng (53%), followed by KwaZulu-Natal (19%) and the Western Cape (11%).
