FNB stokvel fraud warning

As more South Africans turn to stokvels as investment vehicles, fraudsters are looking to profit from the trend.

Cebile Magongo, the Strategic Business Manager at FNB Cash Investments, said that since October 2023, FNB has seen a 35% rise in the number of stokvels opened.

FNB data shows that 23% of their stokvel members are seniors, and 37% of their stokvels have two or more senior members in their groups. 

This may indicate how tradition is passed down to the younger generation as seniors and youth are part of the same stokvels.

“Group savings have historically been used as a collective savings vehicle to help adults raise families and create communities of like-minded people,” Magongo said.

“Senior citizens continue to embrace this culture while passing on knowledge and principles to younger generations.”

“We have observed that seniors save in stokvels for a variety of reasons. Some of the trends of members joining stokvels are for social benefits, such as organizing group trips or getting together for events at various locations.” 

They believe it’s crucial for people of their age, as it helps them socialize because they are likely not to be actively working and may use stokvel gatherings for purposes other than just collecting contributions.

FNB’s data further indicates that stokvels with more senior members are prevalent in the Eastern Cape at 34%, followed by Limpopo at 28%. 

“Being a part of a Stokvel is one of the most popular ways that South Africans foster a culture of saving,” she said. 

However, the challenge has always been ensuring that the Stokvel savings are effectively managed to satisfy the Stokvel group’s objectives.

While saving in a stokvel is beneficial and offers numerous financial and social benefits, it poses risks as group members can become key targets for criminals. 

“This is more prevalent with those individuals who are receiving their contributions at this time of the year,” Magongo added.

“Stokvel groups and members should be vigilant against fraudsters and criminals who are eagerly waiting to scam and rob them of their stokvel contributions.” 

“Moreover, they should be aware that criminals have become advanced in how they target stokvels and their members.” 

She said this will require them to be more alert when sharing funds and spending in-store and online. 

“They should try not to fall victim to scams, especially fake calls or message alerts pretending to be from the bank or other stokvel members,” she said.

Magongo provided a few safety tips for stokvel groups this festive season:

• Avoid cash withdrawals. It’s advisable that all payments are processed through safe digital channels. This will not only safeguard their money but will also help the stokvel save on cash handling fees as digital payments are free.
• Consider doing all digital payments at the last stokvel meeting, ensuring that when members leave the meeting, their funds have been transferred into their personal bank accounts.
• Avoid announcing stokvel meetings or stokvel money withdrawal dates on social media, to friends or family members. This should only be exclusive to members of the stokvel group.
• Avoid carrying and travelling with large sums of money during this peak season, if you must travel consider doing so in large groups.
• If you are not using digital channels, do not withdraw all the funds at the same time. Consider staggering the withdrawals on different days to ensure that your contributions are safe.
• Make cash withdrawals during business hours when it’s safer with security guards present.
• Avoid making cash withdrawals of club members’ contributions on high-risk days such as month ends or the day before the big holidays.

“Taking these precautions will ensure that the festive season remains a safe and joyous time for everyone involved,” she said. 

“We also encourage stokvel members to keep in mind that they don’t need to spend all their money during this period. Some savings can be set aside for the upcoming new year.”