Five Common Types of Fraud

The internet has given us innumerable advantages – but digital connectivity also brings with it many risks. And as significant portions of our lives move online, from shopping and travel bookings to banking and investments, the likelihood of being targeted by scammers increases. As digital technology offers us new ways to connect with the world around us, so too are scammers using these avenues to find new extortion victims.

What is financial fraud?

Financial fraud occurs when money or other financial assets are stolen from you through the use of deceit or criminal activity. Fraudsters typically seek to gain your trust and then ask for money. To be able to win your trust, they may masquerade as bank officers, government employees or simply, private individuals in need of funds.

How financial fraud occurs

As in the physical world, it is essential to stay ahead of scammers to avoid being hit by financial fraud.

The first step is understanding the different routes that hackers use. These include both physical and electronic methods:

  • Telephone calls
  • SMS or text messages
  • Email
  • Social media channels
  • Snail mail
  • Personal meetings

For the purpose of this article, we will focus on the electronic methods used to commit financial fraud in the UAE.

Five types of financial fraud

Fraudsters use a variety of established scenarios to part their victims from their money. These may include offering non-existent cash prizes, phony bank alerts and potentially lucrative investment schemes. Almost all seek to either obtain your money – either directly via a transfer, or indirectly by using your bank account details.

This article presents an overview of the five most common financial scams.

The fraud: Your money is at risk

Scammers turn our instinct for protecting our assets against us with one of the most common phishing cons. Typically, a scammer masquerading as a bank or government official who is contacting you to advise that there is a problem with your bank or investment account and that your funds could be blocked without immediate action. You’ll then be asked to share your log-in credentials or OTP details with the scammer or by clicking on a link that takes you to a very genuine-looking web page. You may even be asked to provide personal details, such as your date of birth or mother’s maiden name. Except that once you’ve shared your details, your money will most likely be transferred to the criminal’s account.

The fraud: A secret investment opportunity

There’s an old adage that if something is too good to be true, it usually is. That’s the case with the investment scam. You may be offered a chance to make a lot of money very quickly perhaps by investing in coronavirus vaccines, property in another country or even government bonds.

After filling out official-looking documentation, you will be asked to make a bank transfer or send a cheque to the scammer’s account – which may be in the name of a fictious or fraudulent company. You’re unlikely to ever get your money back. On investigation, you could well discover that the opportunity in question never existed or that the conman had no authority to represent the company in question.

The fraud: The IT security scam

Ever forgotten your bank account password or company log-in details? Scammers count on the fact that we are used to receiving authorization emails to make money at our expense.

This particular con alerts you to change a password or verify your log-in credentials by downloading a security file. Doing so could activate a malware file that tracks every movement on your computer – without your knowledge. Or you may be asked to allow an antivirus official to work remotely on your computer. In both cases, your credentials and identity details could be stolen. What appears to be a routine matter of security best practice could have devastating consequences.

The fraud: A package you didn’t ask for

The delivery scam capitalizes on the growth of e-commerce and a global disruption in courier services. This type of scam often begins with a WhatsApp message or email about a package to be delivered to your address. You may be asked to pay a small amount of money and click on a tracking link to follow up on or receive the parcel; or to update your details through a link for the delivery to be made.

The email and website may look legitimate – but is in fact fraudulent. Again, you may be handing over your identity credentials and money in return for a massive headache.

The fraud: The lottery prize waiting to be collected

Who doesn’t like the idea of winning the lottery? Scammers have successfully turned our love of freebies against us for many years now. Only, instead of winning any money, victims end up paying out.

With this sort of scam, you receive a call, letter or social media message informing you that you’ve won a lottery or raffle draw. Collecting the prize requires paying a fee or sharing bank account details with a third party, whether this is over the phone, by email or by clicking a link in an attachment.

Staying ahead of scammers

As technology evolves, these basic ideas may be used in a variety of different ways. Instead of pretending to be a bank or government official, for example, scammers may impersonate a friend.

The best ways to avoid financial fraud are by following some basic tips:

  • Never share your bank log-in or credentials with unauthorized persons.
  • Don’t click on a link in your email unless you are extremely sure where it came from.
  • Visit the organization’s website and log in directly instead.
  • Don’t let anyone else log into your computer remotely.
  • Never download documents from people you don’t trust, and always scan them first using a reputed virus protection program.
  • Research all investment and financial offers – a simple Google check is usually enough to reveal a fraud.

The best way to avoid being conned is to stay alert to the possible scams and to double check all communication.

Share this article with your friends and family to help them avoid being conned.

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Keith J Fernandez is an editor and communications professional who advises on marketing content strategy. He is based between the UAE, the Netherlands and India and writes about business, technology and personal finance.

This article is intended to provide general information about finance and investments and does not replace or should be taken as professional financial advice. The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article except information on Citibank N.A. – UAE products referenced herein.
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