Fraud warning for South African investors who use social media

South African investors should be wary of investment scams run on social media as regulators find it increasingly difficult to oversee the digital space.

PSG Financial Services’ COO of distribution, Johannes Theron, warned that tempting online adverts offering unrealistic investment returns have flooded social media in recent years. 

“Many of these schemes operate without oversight, exploiting gaps in regulation to appeal to those desperate for rapid financial gain,” he said. 

“Compounding this risk is the role of unqualified brand ambassadors and ‘finfluencers’, who promote these financial products as personal recommendations without any skin in the game.”

He explained that the issue centres around social media influencers, who are typically compensated for their endorsements.

However, their followers often mistake these promotions for genuine, first-hand financial advice. “This creates a dangerous dynamic, blurring the line between unbiased guidance and deceptive marketing,” he said.

Theron warned that even if an influencer shares recommendations based on their personal circumstances, advice and recommendations around financial decisions and products might not apply to you as no two people have the same financial circumstances and goals.

He identified four ‘red flags’ investors should look out for, warning that some schemes are more sophisticated than others.

• Unrealistic returns: Promises of high rewards with minimal or no risk.
• Pressure to act quickly: Tactics designed to create urgency and push instant decisions.
• Lack of credentials or transparency: Advisers or brand agents without qualifications, regulatory licences or ties to reputable financial institutions.
• No independent verification: Limited background or client reviews or an abundance of overly glowing reviews that appear to be bot-generated or unusually similar in nature.

“Scammers exploit emotional appeals and misinformation to lure in their victims,” Theron said. 

“At the end of the day, the key to protecting yourself is to remain sceptical of any offers that seem too good to be true.”

“Unfortunately, once you’ve fallen victim, it’s often too late to recover your losses, so it’s crucial to avoid rushing into decisions and always question unsolicited or pushy offers.”

To avoid falling victim to unregulated schemes or scams, Theron also recommended working with credible advisers who can demonstrate affiliations with established financial bodies and have a proven track record of ethical conduct.

Dangerous investment scam in South Africa

While it may sound easy for investors to avoid online scammers by sticking to trusted and well-known names in the financial space, a relatively new investment scam makes it more difficult to discern between true and false financial experts.

The Financial Sector Conduct Authority (FSCA) has already issued several statements this year warning the public against fraudsters who impersonate licensed and trusted financial institutions or experts.

This is often done through social media platforms like WhatsApp and Telegram, making it easier for fraudsters to impersonate others and target a large number of people.

So far this year, the FSCA has issued six public warnings about scammers impersonating established and trusted financial service providers, such as Truffle Asset Management, Vista Wealth Management, and Laurium Capital.

The latest warning, released on 28 February 2025, urged the public to be cautious when conducting financial services business with anyone purporting to be Goldsure Financial Consultants.

“It was brought to the attention of the FSCA that certain individuals are soliciting funds from members of the public by claiming to be associated with Goldsure on Facebook,” the regulator said. 

“These individuals are promising members of the public a return of R2,381 from an initial investment amount of R1,000 within three months.” 

The FSCA pointed out that this is not a realistic return. 

It said Goldsure has denied any association or relationship with the individuals using its name and FSP number and confirmed that these individuals are using its FSP number without its permission.

“The FSCA points out that offering financial products and services in South Africa requires its authorisation,” the regulator added. 

“These individuals are not so authorised in terms of any financial sector law to provide financial products or financial services in South Africa.”

“The public is strongly urged to exercise caution when considering investment or trading offers on social media platforms or any unsolicited offers.”

The regulator has repeatedly urged South Africans to verify the following when receiving unsolicited financial advice or offers –

• Verify that an entity or individual is authorised by the FSCA to provide financial products and services, including giving recommendations about how to invest.
• Confirm what category of advice the person is registered to provide. There are instances where companies or people are registered to provide basic advice for a low-risk product and then offer advice on far more complex and risky products.
• Ascertain that the FSP number used by the entity or individual offering financial services matches the name of the FSP on the FSCA database.

This is one of many similar warnings the FSCA has issued in 2025, highlighting the risks associated with taking financial advice online.