As more South Africans take advantage of favourable economic conditions and stable interest rates to apply for home loans, the real estate sector is showing promising growth.
However, the property boom is overshadowed by the rising threat of online fraud: “Firstly, the emergence of AI-powered cybercrime is increasingly undermining the integrity of property transactions,” says Jackie Smith, Head of Buyers Trust, a secure, bank-hosted deposit platform for homebuyers.
“Secondly, in a largely traditional industry where a homebuyer will simply transfer a large deposit to a third party like a conveyancer or estate agent, the risks are high,” she says, adding that a large portion of the country’s estate agencies and conveyancing attorneys are SMEs who unfortunately lack the cyber infrastructure required.
Data Points to Increased Risk of Online Fraud in the Home Loan Sector
Cybersecurity firm ESET’s latest bi-annual Threat Report indicates that South Africa endured the highest number of ransomware and infostealer attacks in Africa during the second half of 2024. And, according to reports by cybersecurity company Check Point in early 2023, 1 in every 15 organisations in Africa experienced a ransomware attempt each week — nearly double that of the global average of 1 in 31.
“These widespread attacks are aimed at individuals, small businesses and large institutions alike,” shares Smith. “Phishing emails and fake documentation are now powered by AI, and these criminals are exploiting the complexity and speed of property deals by inserting themselves into the process.”
The most recent South African Banking Risk Information Centre (SABRIC) Annual Crime Statistics show that fraudulent applications for home and mortgage loans saw a 46% increase. Actual losses over the period due to these fraudulent applications more than doubled too.
Smith shares that the perpetrators conduct home loan fraud through the following methods:
- Misrepresent income, employment history or debt levels
- Use stolen or fabricated identities
- Inflate or fake valuations of properties
- Recruit of ‘straw buyers’ with good credit to cover the real buyer’s identity
- Forge documentation such as payslips or bank statements
“The reality is that fraud has become a professional service, with software platforms empowering criminals with the tools they need to easily access your personal information,” continues Smith, “Sophisticated phishing scams and convincing deepfakes are increasing our online risk – making it essential to adopt extra security measures when deciding where to place your home deposit.”
Smith points to a recent case making news headlines as a prime example of the risk that general consumers face when handing over large, hard earned sums of money. “According to the Legal Practice Fidelity Fund, over R1.4 billion has been stolen from 561 client trust funds, allegedly by the same legal professionals who were empowered to protect their clients’ funds. Of these, only 59 convictions have been made in seven years, with just 25 resulting in jail time.”
How to Avoid Becoming a Victim
In an environment where both digital fraud and professional misconduct are rising, secure deposit handling has never been more critical.
“Too many buyers still transfer funds manually to accounts they can’t independently verify,” Smith warns. “That’s why using a secure, audited, and bank-integrated platform like Buyers Trust is essential. Your deposit doesn’t sit in an individual’s account, it’s held securely in a dedicated bank-hosted facility until the deal is finalised.”
Smith shares several top tips to aid buyers as follows:
- Verify payment details: Validate any banking details from the bank in question before making a deposit. “It’s strongly advised that you call the person/ organisation in question (don’t email them) using a number that you have sourced yourself, and not from an email footer.”
- Be vigilant:Take extra care when receiving emails with links or attachments that seem suspicious. “In a case where its linked to a property transaction, you can once again call the provider prior to opening it to ensure that it’s legitimate.”
- Put added security measures in place:“Make sure that you keep your devices up to date with anti-malware software and that you choose strong passwords which are not easy for an attacker to guess.”
- Question authority: “Just because someone has a title doesn’t mean that they’re always trustworthy. Always ask where and how your deposit is being held.
“At the end of the day, your property purchase is one of the most significant financial decisions you’ll make. Don’t let trust and a lack of due diligence be your biggest risks,” concludes Smith.
