Overview of SIM Swap Fraud

SIM swap fraud has become a major source of economic crime and poses a serious threat to consumers, banks, and mobile communications service providers. A 2020 report by the South African Banking Risk Information Centre (SABRIC) reveals the alarming extent of the issue.

In 2020 alone, the total losses from banking fraud across all digital platforms were R309,563,109. SIM swap fraud accounted for 63.12% of all these digital banking fraud incidents. 2020’s reported incident rate of SIM swap fraud was 91.35% higher than in 2019. Cases of SIM swapping being used to commit banking app fraud increased by 213.9% compared to 2019 and accounted for 26.11% of total banking app fraud incidents, while gross losses increased by 14% (totalling R123,990,231). The costs of SIM swap fraud are immense, so combating this form of digital crime must remain a priority.

What is Sim Swap Fraud? Phishing Scams and Identity Theft

SIM swap fraud entails the fraudulent transfer of a victim’s SIM card user data to another SIM card operated by criminals. In other words, it involves the transfer of a user’s “identity” from their legitimate SIM card to a fraudulent SIM card.

Typically, SIM swap fraud is committed using social engineering techniques: the practice of abusing a person’s trust in authority and tricking them into handing over sensitive information. For example, fraudsters may pose as a consultant for your mobile communication service provider before reaching out and asking you to confirm your personal information. This information, such as login details or answers to security questions, will be necessary to verify your personal identity.

Once fraudsters have obtained this personal information, they will phone your mobile communication service provider, claiming to either have lost or damaged their (your) SIM card, or claiming that they need help switching to a new phone. The mobile communication service provider will ask several security questions to validate this request and confirm the identity of the legitimate SIM card owner, which the fraudsters will answer using your stolen personal information.

Having successfully answered the security questions, the fraudsters then request the activation of a new SIM card in their possession, which ports your telephone number to the fraudster’s device containing the new SIM. This gives them possession of your cellphone number and grants them access to all services that rely on your cell number for verification. The criminals may then assume your identity and intercept security measures such as One Time Pins (OTPs), which they can use to access your bank accounts, among other things.

SIM Swap Fraud Prevention: Phone Number Verification and Identity Proofing

Designed to mitigate risk and guard against fraud, ThisIsMe offers the SimSwap service to verify mobile numbers, track SIM card swaps and trace identities. If a SIM card swap has taken place, the service will return the exact date that swap took place, the service-related providers, and the risk level associated with that SIM card.

As South Africa’s leading provider of world-class identity verification, due diligence and fraud prevention solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To see how we can help you verify identities and reduce operational risk, contact our team here.

South Africa’s Rise of Identity Fraud and Economic Crime

The economic costs of SIM swap fraud are extensive. In 2020 alone, the total losses from banking fraud across all digital platforms totalled R309,563,109, of which SIM swap fraud accounted for 63.12% of all these digital banking fraud incidents.

Mobile banking (the usage of online banking services on a cellphone) represents an exceptionally high rate of SIM swap fraud. SIM swapping accounted for 92.67% of all mobile banking fraud incidents and pushed gross losses up to R45,786,257 – a 62.1% increase compared to 2019. This is due to mobile banking’s usage of One Time Pins (OTPs) that are sent to a cellphone number and are therefore extremely vulnerable to SIM swap fraud.

Although online banking accounts for the smallest number of fraud incidents, it represents the highest portion of gross losses from digital banking fraud at R139,786,621. Once again, access to online banking may require a One Time Pin (OTP), which means that victims of SIM swapping are at high risk of quickly falling prey to online banking fraud.

Data Validation and Identity Verification Services South Africa 

As revealed in a report from PwC, these statistics on SIM swap fraud exist within a broader South African context of pervasive economic crime. Since 2009, the country’s incident rate has been, on average, 27 percentage points higher than the global average. In 2020, South Africa was tied with China for the country with the highest reported incident rate of economic crime, while between 2018 and 2020, South Africa reported total losses from economic crime in excess of $1.7 billion (more than 25 billion South African Rand).

In this context of pervasive economic crime, verifiable identities and comprehensive risk management solutions are a necessity to protect against fraud. To experience ThisIsMe’s full suite of advanced due diligence services, contact our team here.