The Office of the FAIS Ombud has issued a caution to recipients of SASSA grants, especially elderly beneficiaries, regarding unauthorised deductions being made for funeral policies, and has called on consumers to stay alert to the possibility of being scammed.
Key Takeaways
- Scammers target trust, not just data: Fraudsters often lure elderly SASSA beneficiaries with fake vouchers or competitions before harvesting personal and biometric information to set up unauthorised premium deductions.
- DebiCheck can be weaponised: A security feature meant to protect consumers, the DebiCheck SMS confirmation, is being exploited by getting victims to approve messages they don’t fully understand, opening the door to direct bank account deductions.
- Refunds and cancellations are possible, but action is required: The FAIS Ombud can order providers to repay premiums and cancel policies, but only once a written complaint is lodged, so victims need to check their statements regularly and report unauthorised deductions promptly.
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How Consumers Are Being Targeted
According to the Office of the FAIS Ombud, there has been a noticeable rise in complaints lodged by older consumers, who claim that insurance intermediaries approached them with offers such as food vouchers, entries into competitions, or quotations for financial products, only for their personal details and biometric information to be requested afterwards and subsequently used to set up premium deductions.
The DebiCheck Trick
In a number of other complaints, those affected explained that they had been misled into accepting a DebiCheck SMS verification process. Once accepted, this authentication step permits the premium deduction to be taken straight from the complainant’s bank account. In addition, complainants can be manipulated into putting their signatures on policy documents that contain a debit order authorisation clause hidden within the paperwork.
DebiCheck is a South African Reserve Bank initiative introduced to reduce debit order fraud by requiring account holders to confirm new or changed debit orders via a secure prompt, usually an SMS or banking app notification, before the first deduction can go through. The system was designed to protect consumers, but scammers have found ways to exploit people’s unfamiliarity with how it works.
Common Warning Signs to Watch For
Added tips based on this report:
- Unsolicited offers of vouchers, prize draws or free product quotes from people claiming to represent an insurer or broker
- Requests for fingerprints or photographs as part of a “competition entry” or “verification process”
- Pressure to respond quickly to an SMS you do not fully understand
- Vague or rushed explanations when you ask what a form or message actually means
- Reluctance to provide written documentation of what you are signing up for
What Happens When a Complaint Is Investigated
The Ombud noted that every complaint of this nature is looked into, with the aim of reaching a resolution wherever this is possible.
Should the evidence gathered during an investigation confirm that a complainant was deceived into authorising the deduction of premiums, or that no agreement to the deduction was ever given, the Financial Services Provider involved will be instructed to repay the premiums that were taken and to halt any further deductions linked to the policy. Where a full refund is not warranted, the Provider will, at a minimum, be directed to cancel the policy altogether and stop taking premiums from the consumer.
Ombud’s Warning to SASSA Recipients
The Office of the FAIS Ombud has strongly encouraged SASSA beneficiaries, and in particular those who receive the Older Persons Grant, to exercise caution whenever they are approached by individuals offering competitions, vouchers, or financial products of any kind.
Consumers were cautioned against handing over their identity numbers, their banking information, or their biometric data for such purposes under any circumstances.
It was further advised that consumers should refrain from approving DebiCheck SMS notifications that they do not fully comprehend, and that they should make a habit of checking their bank accounts as well as their SASSA payments regularly to identify any deductions that were not authorised.
Recommended Precautions
Added guidance:
| Situation | What to Do |
|---|---|
| Approached with a “free” offer requiring your ID or fingerprints | Decline and walk away, or ask for written proof of the company’s FSP registration |
| Receive a DebiCheck SMS you don’t understand | Do not approve it; contact your bank to confirm what it relates to |
| Notice an unexplained deduction on your SASSA payment | Check your bank statement monthly and report discrepancies immediately |
| Unsure if a policy was activated without consent | Lodge a written complaint with the provider debiting your account |
Should a person come to believe that a funeral policy has been put into effect against their SASSA grant without their knowledge, or that premiums on a policy are being taken from their bank account without their having consented to this, they have been advised to lodge a written complaint directly with the service provider responsible for debiting their account.
Consumers who remain unhappy with a service provider’s response, or who receive no response at all within eight weeks, are entitled to escalate their complaint to the FAIS Ombud’s office directly for independent investigation.
Conclusion
The FAIS Ombud’s warning serves as a timely reminder that South Africa’s most vulnerable grant recipients remain a favoured target for unscrupulous insurance intermediaries, and that protecting oneself starts with simple, consistent vigilance rather than complex financial knowledge. By declining to share identity numbers, banking details or biometric information with unsolicited callers, questioning any DebiCheck SMS that isn’t immediately understood, and reviewing bank and SASSA statements on a regular basis, older beneficiaries and their families can catch unauthorised deductions early and put a stop to them before real financial harm is done. Should a policy already be in place without consent, the message from the Ombud is clear: lodge a written complaint with the provider without delay, since swift action gives the best chance of a full refund and a permanent end to the deductions.
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