Last week, Groundup published the findings of two first-year Stellenbosch University students, Joel Cedras and Veer Gosai, who uncovered fraud in the Social Relief of Distress (SRD) Grant system.
The South African Social Security Agency (Sassa), which administers the grant to millions of people, responded that they are aware of fraud but argue that the students published findings which do not take into account the efforts by the grant payment agency.
What The Students Found
The students found that fraudsters were using unsuspecting citizens' identity numbers to apply for the SRD Grant and receiving the funds in bank accounts set up using the same ID numbers.
This is concerning as it indicates that unsuspecting individuals have grant applications in their names. If they are found to qualify for the grant, they are then being stolen from.
Gosai says they found that not only was their fraudulent SRD grant application made in his name, but also a bank account set up using his information.
We were shocked to find out that there were bank accounts on our name open without our knowledge and Sassa applications created and people were receiving payments on on our behalf.
After conducting legal vulnerability tests, the pair of students found that the system allowed an alarming number of grant applications for people born in February 2005, with a 91% application rate—an unusually high figure suggesting potential fraud.
We found that 74,931 SRD grant applications were made for people born in February 2005. According to Statistics South Africa (as of 2020) there were 82,097 births in February 2005. This would mean that the application rate is roughly 91%.
The students also conducted a campus survey of 60 students which revealed that 56 of them had SRD grant applications made in their names even though they had never applied.
How Sassa Verifies SRD Grant Applications
To qualify for the SRD grant in South Africa, applicants must meet the eligibility criteria.
They need to be South African citizens, residents, or special permit holders, but they shouldn't be receiving other government support in the form of UIF benefits or NSFAS bursaries. Their bank account should have less than R624 to be eligible for the SRD grant.
Sassa conducts verification checks in collaboration with the Department of Home Affairs for identity and citizenship checks and shares bank details with the Department of Treasury for income verification. Once satisfied with eligibility, Sassa proceeds with payments, and this verification process accounts for the end-of-month payment schedule.
The students’ findings indicate that these verification checks are being circumvented by criminals.
While Sassa’s Breton Van Vrede confirmed the findings by the two University of Stellenbosch students regarding the fraud, he contended that Sassa has been aware of the issues of identity fraud. They added that a lot of work has been done by the agency with the introduction of additional verification checks to ensure the right grant is paid to the right person.
We do believe our control measures that we've put in place are quite stringent.
Sassa says it has strengthened its security by introducing algorithms to detect suspicious applications and enhanced identity verification processes, including facial recognition and one-time password (OTP) checks.
As the threat landscape has evolved, Sassa has adapted by implementing various countermeasures. These include algorithms that analyse data and metadata to flag potentially fraudulent applications requiring additional verification.
Van Vrede says there are approximately 2 million SRD grant applications that have been flagged for suspected fraud.
The 2 million applications have been flagged for further identity verification, as a result of the success of these measures. Grant applicants would receive a Referred SRD grant status if they must do further verification.
As a result of these measures, more than 2 million applications have been blocked and placed in a “referred status”. This requires applicants to verify their identity through facial recognition software.
The students argue that the SRD system requires a complete overhaul, either through verification of applications or a complete system rebuild.
They further criticised Sassa’s reliance on biometric verification as impractical and placing undue burden on vulnerable citizens. This concern was echoed by civil society groups who argued that many citizens do not necessarily have devices with the required specifications to complete the verification checks.
