DIGITAL BANKING FRAUD AND AVENUES FOR REDRESS

25 August 2026

Digital banking fraud has surged into one of South Africa’s most pressing financial concerns, reshaping the landscape for consumers, regulators, and the media alike.

The Banking Division of the National Financial Ombud Scheme of South Africa (NFO) warns that as the country’s banking sector embraces rapid digital transformation – from mobile apps to online payment platforms – the gains in accessibility have been shadowed by escalating risks. Fraud, scams, and disputes are no longer isolated incidents; they have become systemic challenges that demand vigilance, accountability, and reform.

Nerosha Maseti, the Lead Ombud of the NFO Banking Division states that fraudsters are using increasingly sophisticated methods, including phishing, smishing, vishing, impersonation scams, remote-access software, SIM-swap fraud, fake investment schemes and other cyber-enabled crimes. Victims often do not realise they are being deceived or that they are not speaking to a genuine bank employee. She said despite repeated warnings, many consumers believe the caller is legitimate and respond to the urgency created by the fraudster. This can make it difficult to determine when or how their credentials were compromised, and some consumers understandably believe the fraud could only have been committed by bank employees.

“Many victims lose not only the money in their current accounts, but also savings, investment funds, unused overdraft facilities and available credit. The financial and emotional impact can be severe and may affect entire families.

“When consumers fall victim to fraud, the question before the National Financial Ombud is rarely whether a crime occurred. In many cases, once the evidence has been carefully assessed, that fact is no longer disputed. The key issue is whether the bank’s conduct contributed to the loss, and whether the bank acted fairly, reasonably, and in line with its legal and contractual obligations before and after the fraud was reported,” said Maseti.

Who Is The NFO And How It Can Help?

Maseti said when a dispute with a bank arises, or after losing money to a scam, many consumers turn to social media, the internet or even AI for guidance. Unfortunately, this advice is not always reliable or accurate.

She said consumers may be encouraged to seek legal assistance, which can be costly, time-consuming and carries the risk of litigation.

Established on 1 March 2024, the National Financial Ombud gives consumers a single point of access for complaints involving banks, non-bank credit providers, life insurers and non-life insurers. It is recognised by the Ombud Council as an industry ombud scheme for this purpose.

The National Financial Ombud is not a regulator or a court. It is an independent alternative dispute resolution body that investigates complaints and determines what it considers fair and reasonable in each case, taking into account the evidence, relevant legal principles, industry practice, fairness and equity.

The National Financial Ombud’s services are completely free for consumers who may choose to use this service or pursue other available avenues for recourse.

“Although the NFO is funded annually by participating financial institutions, including insurers, banks and credit providers, this does not influence how complaints are investigated or how outcomes are reached by experienced adjudicators.

“Neither party influences the investigation outcome. Each complaint is assessed on its own merits and decided fairly, independently and impartially,” Maseti said.

The National Financial Ombud’s independence and impartiality are central to its mandate. It must not be influenced by either party, public opinion, social media commentary or media coverage of a particular matter.

How Are Fraud Matters Investigated?

When investigating complaints, the National Financial Ombud considers a broad range of information, including account records, transaction data, internet and mobile banking logs, authentication records, device information, one-time password records, audit trails, account notes, correspondence, fraud reports and call recordings.

These records help establish how the disputed transactions were initiated, which devices were used, what authentication methods were applied, and what steps the financial institution took before and after the transactions occurred. The National Financial Ombud may also assess customer authentication processes, general and case-specific fraud prevention measures, automated transaction monitoring, and alerts or notifications sent to customers.

In many cases, once the fraud itself is not in dispute, the institution’s response after the fraud was reported becomes central, including its efforts to recover funds from third-party accounts.

Maseti said the National Financial Ombud is well placed to investigate cases where funds are transferred between banks, as its jurisdiction extends to participating banks within the scheme’s mandate. However, it cannot compel information or documents from independent third-party organisations, such as crypto or gambling institutions, that fall outside its jurisdiction.

The outcome of each investigation depends on the facts of the case and the evidence available. Consumers are encouraged to submit any information or documents they believe are relevant, and all relevant evidence provided is considered during the investigation.

SA’s Financial Consumer Protection Framework

Organisations such as the National Financial Ombud of South Africa (NFOSA), the Financial Sector Conduct Authority (FSCA), the Ombud Council and the National Credit Regulator (NCR) each contributes to consumer protection, but their roles and mandates differ.

It is important for consumers to understand what each organisation does so they know their rights and can approach the appropriate body for assistance. South Africa’s financial consumer protection framework is established under the Financial Sector Regulation Act, 2017.

Within this framework, the FSCA acts as a regulator responsible for supervising the conduct of financial institutions, including banks, and promoting the fair treatment of financial customers. Its focus is on legislation and systemic issues, while individual complaints are generally referred to the relevant ombud scheme.
The Ombud Council regulates ombud schemes by recognising and overseeing them to ensure that consumers have access to free dispute resolution services that operate independently, fairly and effectively.
The NCR is also a regulator and oversees credit providers that offer credit regulated by the National Credit Act. Complaints involving participating credit providers and banks may be referred to the NFO, while debt counselling disputes are handled by the NCR.

Who Should Consumers Approach?

Consumers with disputes involving unauthorised transactions, fraud, account-related issues, service failures or other banking matters may approach the NFO at any time.

However, consumers are encouraged to first allow the bank an opportunity to resolve the complaint. Fraud and similar matters should be reported to the bank immediately and, where necessary, escalated through the bank’s internal dispute process.

Where criminal conduct is involved, including fraud, scams or theft, consumers should also report the matter to the South African Police Service. Reporting the matter to SAPS does not prevent a consumer from seeking assistance from the NFO regarding the dispute with the bank.

And If A Consumer Disagrees With An NFO Outcome?

A common misconception is that the Ombud Council or the FSCA can hear appeals against National Financial Ombud decisions.That is not the case.

The Ombud Council oversees recognised ombud schemes and monitors whether they operate effectively, independently and fairly. It does not, however, re-investigate individual complaints.

The FSCA regulates and supervises the banking sector, but its mandate does not include reviewing or overturning National Financial Ombud outcomes. Consumers who are dissatisfied with an outcome may use the National Financial Ombud’s internal objection and escalation processes, where applicable. If new evidence or information becomes available that could materially affect the outcome, it may be considered. As with courts and tribunals, disagreement with an outcome does not necessarily mean the investigation was flawed. Each decision is based on the available evidence and the specific facts of the complaint.

Importantly, National Financial Ombud decisions are not binding on consumers.

Maseti said: “If consumers disagree with an outcome, they remain free to follow the internal escalation and appeal process or to approach another appropriate forum or a court”. Their rights are in no way negatively impacted as a consequence of approaching the NFO to investigate their matter. “

Successes, Independence And impartiality

In any dispute, it is common for one party to be dissatisfied with the outcome.
For this reason, an Ombud’s effectiveness cannot be judged by the number of complainants who receive compensation, the number of decisions made against banks, or whether a specific outcome is popular. The real measure of an Ombud is whether it acts independently, considers all relevant evidence, and reaches the conclusion required by the merits of the case.

Maseti said the National Financial Ombud Scheme remains committed to offering South Africans a free, accessible and independent dispute resolution service that handles complaints fairly and objectively”.

“While some criticism is inevitable from parties disappointed by decisions that could not be made in their favour, the value of the NFO’s work is reflected in the tangible outcomes it delivers.

“In 2025 alone, the Banking Division of the National Financial Ombud recovered R53 million for consumers, while continuing to uphold the principles of fairness, independence and accountability that underpin public trust in the Scheme,” she said.

For more detailed information on the National Financial Ombud statistics and complaint trends, you may read the latest 2025 Annual Report published in June 2026 which can be found on the www.nfosa.co.za