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Ways In Which Financial Frauds Can Wipe Your Hard-Earned Income
Frauds and scams have been around ever since humans had assets worth thieving, but the digital revolution in financial services led to the industrialization of financial frauds.
Photo Credit : Shutterstock
Ever since the pandemic, financial frauds have been on a steady rise, endangering the security of digital native and digital nascent users. The past year was rife with incidences of cyber frauds, ATM frauds, debit /credit card frauds, predatory lending app frauds, insurance frauds etc. Today, financial fraud has become a trillion-dollar industry and with the advent of newer technology and our growing adoption or rather dependencies on digital payments, the industry looks to grow further unless we take precautionary measures during our digital interaction journeys.
Financial frauds have always been around!
Frauds and scams have been around ever since humans had assets worth thieving, but the digital revolution in financial services led to the industrialization of financial frauds. As huge volumes of consumers are flocking to online channels, frauds have become more evolved. Hence, it’s increasingly important for us to be extra cautious in our financial transactions. Most of us may not even be aware of any spyware that is installed on our computers and maybe tracking our keystrokes or reading our messages. There are now several phishing scams which use links in emails to direct customers to fake/look-alike websites of banks and other financial institutions. Some involve ‘social engineering’, in which the fraudsters posing as company officials call up victims seeking their personal details such as PAN/Aadhar Nos., Debit & Credit card PIN, CVV, OTP etc., all in the garb of updating their e-KYC or increasing their credit limit. SMS texts purporting that your EMI card has been suspended and requires e-KYC to be redone is a classic example.
Warning Signs of Loan Scams
Limited period offer: Personal loan scams involve false promises and offers that appear too tempting. If you come across a great offer, discounted interest rates or other benefits that are available only for a limited period and the lender presses you to apply within a specific time period, just grow cautious! This is a common technique used in personal loan scams in India.
No checking of credit score: Every authentic and established lending institution will always check your income tax returns, credit score, credit history, and previous loan payments before sanctioning your loan process.
Direct contact by the lender: When the lender contacts you directly and tries to imply that you are being provided special attention and care as a customer, you should not get carried away. You only get a call once you have applied for a loan and the lender is conducting a pre-screening before taking up your application. An unsolicited call would mostly be a personal loan scammer that you should be cautious of.
While financial frauds are associated mainly with urban areas, rural & semi-urban India take the lead when it comes to insurance frauds mainly because insurers do not have proper infrastructure to perform due diligence.
Frauds associated with accident claims pose a significant problem for general insurers. In many cases, those who died of natural causes were filed as road accident victims causing enormous losses to insurers. While there are various fraud rings working on planning / inventing losses for a claim pay-out, many times frauds are not committed intentionally, but they still affect both the policyholders as well as the insurance companies. For example, quoting inflated claims or including old damages as part of new claims, shops / garages overstating the accident damage to make money from unnecessary repairs or opting for parts replacement instead of simple repairs are some of the cases.
Health insurance industry also faces huge losses because of increasing fraud claims such as missing out on details of any pre-existing disease or mistakenly entering an incorrect date of birth while filling out the proposal form, manipulating pre-policy health check-up findings are some of the instances seen.
Remember, a financial fraud can happen only when you provide an opportunity to the scamsters. So, next time, think before sharing any sensitive data with someone via online, social media or any other applications installed on your phone, because what you share is permanently ‘shared’ in the digital world!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.