Investment scam warning in South Africa

The Financial Sector Conduct Authority (FSCA) has had to issue nine public warnings cautioning South Africans against financial scams so far this year, as the country’s fraud problem continues to worsen.

Between 10 January and 4 February 2025, the FSCA issued nine public warnings against individuals and companies seeking to defraud South Africans.

In the first warning, released on 10 January this year, the watchdog warned the public to be cautious when conducting financial services business with CMFX Trading.

Since then, the regulator has issued similar warnings about Gold Earnings Hub, Africa Gold Capital, Zithulele Funeral Services, and Raindrop Brokers.

The FSCA has also warned about scammers impersonating established and trusted financial service providers, such as Truffle Asset Management, Vista Wealth Management, and Laurium Capital.

The latest warning, issued on 4 February, cautions the public against administrators of a WhatsApp group purporting to be Brandes Investments, incorporated in Ireland.

Like most of the abovementioned cases, these fraudsters promise unrealistic returns and purport to be from an established financial service provider.

However, in this case, Brandes Investments was authorised to provide financial services in South Africa until it requested to lapse its licence on 19 April 2021. 

Therefore, Brandes Investments is no longer authorised to provide financial services in South Africa.

Regardless, scammers are using the company’s name and claiming to be Brandes Investments’ representatives. The FSCA said they use a WhatsApp group to solicit funds from the public.

In its warnings, the FSCA outlines some ‘red flags’ to look out for when dealing with persons offering attractive investment opportunities. These tell-tale danger signs include:

• Unrealistic returns.
• Requirements to pay for services upfront before any work is done.
• Requirements to pay more money to have your investments returned.
• Requirements to pay for training.
• Claims that you must act and pay urgently, i.e. putting you under pressure.
• Vague information about the investment product.

The regulator’s warnings have become increasingly important as instances of fraud and scams become more widespread in South Africa.

Last year, the Southern African Fraud Prevention Service statistics revealed a 32% increase in fraud incidents and a 54% rise in impersonation fraud victims compared to 2023.

Satrix’s head of brand, René Basson, said the problem has been exacerbated as internet use grows.

“The digital landscape has become a hunting ground for sophisticated scammers. They’re not just after your personal information; they’re targeting your hard-earned investments,” Basson warned.

“Globally, we’re seeing increasingly clever tactics, from fake investment platforms to impersonation of financial advisers on social media.”

Most of the scammers that the FSCA has warned against use social media platforms like WhatsApp and Telegram to connect with their potential victims.

However, some scammers are more technologically advanced than others, making it easier for them to deceive the public.

For example, on 14 January this year, the FSCA warned that Gold Earnings Hub and Africa Gold Capital use deep-fake images and videos involving, amongst others, billionaire Patrice Motsepe. 

In these deep-fake videos, Motsepe – who chairs African Rainbow Minerals – promotes the investments offered by Gold Earnings and Africa Gold. 

“The videos appear to be fraudulent deep-fake videos. African Rainbow Minerals (ARM) has confirmed that neither it nor Dr Motsepe have any association or relationship with Gold Earnings and Africa Gold,” the FSCA said. 

“ARM and Dr Motsepe have condemned the actions of Gold Earnings and Africa Gold and are considering civil and/or criminal action.”

Basson explained that while social media platforms have become valuable resources for investment tips and financial news, they have also opened new avenues for fraudsters. 

“Social media is well and truly integrated into our daily lives. However, investors need to stay alert, considering the increasing number of scammers taking to social media,” she said.

“Often, the scams are so believable it’s easy to be deceived. Fraudsters have even taken to imitating key personnel by using their profile photos and company logos.”