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HomeBUSINESS10 Types of financial fraud that you should avoid with your money

10 Types of financial fraud that you should avoid with your money

Today, there are many financial frauds that can jeopardize your finances, and even your own personal identity. If you do not want to be a victim of them, it is best that you know them and know how to avoid them as an expert.

These crimes not only threaten the finances of individuals, but also small, medium and large companies, and therefore cannot be underestimated at any time.

Especially since most compensation programs do not provide for the return of money if it has been fraudulently stolen.

What is a financial crime?

How are financial frauds defined? According to Interpolthe “possibilities of obtaining money illegally are endless.”

Financial frauds deprive a person of their money or capital. Consequently, they do great damage to your financial health. The most common are:

  • Investment or securities fraud.
  • Tax identity theft.
  • Investment fraud.
  • credit fraud.

These crimes are carried out through very varied methods, but in the end, the consequence is the same.

Basically, the affected individuals or entities face difficult situations in terms of losing money.

And despite the fact that complaints can be channeled to the competent bodies, not all cases have a happy ending.

Safeguard your financial future it has become a must, as technological advances have fueled the rise of financial fraud over the past decade.

Undoubtedly, these cause havoc in the economy of individuals, banks, public or private companies, and even in governments. Consequently, they are increasingly feared by society in general.

Financial scams you should avoid at all costs

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The list of financial frauds is really long. However, this time we will focus on the personal type, since they are usually the most frequent:

1. Identity theft

It happens when extracting a person’s financial information to make fraudulent charges. For example, they can extract your banking information, or that of your Credit cardsto make purchases on your behalf.

Identity theft can also be executed through some social channels. The most common modus operandi is to use your profiles to ask your contacts or closest friends for money, in the name of a “supposed family emergency”.

2. Credit fraud

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It happens when a person asks for a loan using the information of another person. There are some financial institutions that grant quick loansin order to provide optimal management to its customers.

They basically just require you to fill out an application on-line to release the funds in a matter of minutes.

Unfortunately, this has become a double-edged sword for the clients and lenders themselves.

Do you wonder why? If someone fraudulently accesses your banking information, they can apply for a loan in your name, and you will be left with a major debt that you may not be able to settle easily.

Another form of credit fraud occurs when lenders grant credit with incomplete or incorrect information.

Therefore, you should check all the conditions very carefully, and you may even consult with a lawyer before signing.

3. Investment fraud

the scene of “The wolf of Wall Street” in which Jordan Belfort, played by Leonardo Dicapriosells company shares by telephone, is a clear example of investment fraud.

This crime consists of using false information, promising impossible things, and even altering reality, to make a third party invest large sums of money in companies that have no future.

Avoiding this type of fraud is a bit complex; especially if you have little financial education.

Therefore, it is best to contact an investment specialist, or a broker with years of experience, before making disbursements of money that can quickly dilute your wealth.

4. “Spam” emails

They are emails sent, in a massive way, to people who did not request it. These usually include very attractive and persuasive messages.

These emails can be camouflaged as “advertising communications”, or even worse, They can take the form of a very well structured financial receipt.

They usually include a link, or a downloadable file. But, in reality, they are viruses capable of stealing information from your mobile or computer.

Do not access emails from unknown senders, or download files or attachments that could put your personal information or your own identity at risk.

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5. Phishing

He Phishing It is one of the most common and dangerous financial frauds that exist, since it is not easy to identify by an ordinary user.

This is how it works: The person who wants to commit the fraud pretends to be a bank, and contacts his victim with the excuse that there are irregular charges in his bank account.

This fraud can be committed through a phone call, by text message or WhatsApp.

Its purpose is to steal users’ confidential information, such as their credit card numbers, and of course, their respective passwords.

If you ever receive such a call, avoid offering sensitive information. Instead, hang up the call and contact your bank directly to verify the information.

6. E-commerce fraud

According Statista, in the past three years, global e-retail sales exceeded $17 billion.

Believe it or not, this has also raised the rate of fraud related to the sector e-commerce.

These financial frauds are generated when Internet sales do not materialize, but the money is still deducted.

As if that were not enough, the user cannot contact the seller to channel the claim, since everything happens in a shady and fraudulent way.

Likewise, fraud is committed when the criminal steals the information of the card with which the online payment has been made.

In order not to be a victim of these scams, the ideal is to access websites or online stores that are not of dubious origin.

Another simple and effective recommendation that you should take into account is to enter them through their official domainsand not through the ones that show up in search results, because they are often designed to scam you.

7. Pyramids

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Pyramid schemes are one of the biggest financial frauds of all time, and despite that, there are still people who fall for their traps.

If someone promises you overnight earnings without a minimum of effort, or without explaining the origin of the funds they manage, the wisest thing is that you get rid of that offer as soon as possible.

This fraudulent business scheme consists of recommending and attracting more clients, so that they are the ones that generate benefits for the original participants.

There are different types of pyramid schemes, the Ponzi scheme being one of the best known to date.

It consists of attracting new investors and using their funds to pay profits to older investors.

If you ever get a suspicious offer, or that in your opinion has the appearance of a pyramid scheme, avoid falling for it, or giving money to the person who is trying to deceive you at all costs.

8. pharming

This type of fraud consists of redirecting the person to a false web page through pop-up windows.

Usually, an error message appears, along with a call to action like this: “Click here to fix it.”

Similarly, it is common to receive messages like this: “You have a virus, download this antivirus right now”.

So when users click on the fraudulent link, (without knowing its true nature), their information is stolen.

For this reason, you must be very careful when browsing the Internet, as well as carefully read the information that appears in pop-up windows before clicking on them.

9. ATM fraud

There are many ways to commit financial fraud at ATMs. One of them is to alter the ATM’s reader band to obtain the information of that card.

Criminals also focus on distracting the person who approaches the ATM to change the card, or even a check, (in case they make a deposit).

If you usually carry out frequent operations through an ATM, you must be constantly alert. Don’t allow other people to approach you or try to distract you, and be sure to call security if you notice any strange or suspicious behavior on the site.

10. Fake apps

Customers often receive update messages for some applications to continue using them without problems-

But the purpose of these actions is clear: to steal information from your devices with incredible ease.

What should you do to avoid these scams? It is best to update or download applications from the official Android and iOS stores, rather than through messages from external sources.

How to avoid scams like a pro

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Natural persons are very prone to financial fraud as fraudsters act smart and bold.

The good news is that there are different mechanisms to avoid them like an expert:

take care of your keys

Do not put your personal passwords on computers or devices that are not your own, as these can quickly store the information.

If so, your personal data will be at the mercy of a third party and they could easily use it for fraudulent purposes.

Do not share personal information

If you receive a phone call from a bank or company that provides you with a financial service, avoid sharing your personal data.

Scammers pose as these organizations to steal sensitive data that compromises your finances.

Be careful when making electronic payments

Before shopping online, Check that the recipient is real and that their accounts or payment instruments are affiliated with a legal tender financial institution.

Some people verify the veracity of the companies by communicating with them through different channels available on the web; and you could do the same to protect your money.

Do not share your access codes

Many applications or platforms will ask you for security codes so that you can register, or even access your account.

These codes are usually sent by email or by text message. Therefore, your most important job is to protect them at all times.

Do not open links unknown

If you receive a link by message or email and you doubt its origin, do not open it, since it could be a scam to access all the information on your device.

This is a way to steal information from your bank accounts, and even from your social networks, to ask your acquaintances for money on your behalf.

Shop on trusted platforms

When you go to make purchases online, make sure you do it through platforms that protect your money, such as Amazon either Free market.

distrust those e-commerce that are little known or that do not have basic security guidelines, because you could be scammed.

Protect your money!

Being a victim of financial fraud is pitiful; but if you extreme your security measures and stay alert, you could come out undefeated.

Actually, you do not have to become financially paranoid, but be aware of the dangers that exist so that your money is not in danger.

Continue reading: 10 Things Banks Don’t Want You To Know

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