Module 5
Financial Scams and Frauds
Types of Financial Frauds
Ponzi-schemes
Investment schemes that promise to pay relatively
high rates of returns for fixed term investments.
They are fraudulent investment plans - money is
not invested at all !
Instead, every new investment is used to pay off
earlier investors.
Types of Financial Frauds
Pyramid Schemes - Schemes which promise consumers or
investors large profits based primarily on recruiting others to
join their program, not based on profits from any real
investment or real sale of goods to the public. Some schemes
may purport to sell a product, but they often simply use the
product to hide their pyramid structure.
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Types of Financial Frauds
Identity fraud
Fraudsters on-line 4
Types of Financial Frauds
Identity fraud – Someone impersonates you and uses your
personal information to steal money.
Identity fraud is common on Internet
Fraudsters give instructions to banks for fraudulent money
transfer.
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Types of Financial Frauds
Phishing
Internet Banking clients receive e-mails which are tricky
asking them to give account login, password & personal
details to website which look like their legitimate bank.
These details are then exploited to steal money from
your account.
Types of Financial Frauds
Card Fraud
Starts with the theft of your bank card.
Stolen /loss cards remain usable.
Thief make unauthorized with the
purchases until you notify your bank. card
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Types of Financial Frauds
Skimming – This involves stealing information off a credit
card during a legitimate transaction.
Fraudsters swipe the card through an electronic device
known as a “wedge” or “skimming device” which records
all information contained on the magnetic strip.
Fraudsters use the stolen information for online purchase or
to reproduce the card.
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Types of Financial Frauds
Counterfeit cards – The fraudsters steal cards’
information to make fake cards or sell the card
information.
The victim rarely knows as he still has the real card in his
possession.
Types of Financial Frauds
Advance fee scams
These scams are usually perpetrated through a letter, email
or phone call offering you a large sum of money if you can
help someone transfer millions of rupees or other currency
out of his country.
To initiate the transaction, you are asked to send details of
your bank account and an administration fee.
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Types of Financial Frauds
Fund Transfer scams
You are asked through an advert or email to receive a
payment into your bank account, and to send it abroad in
return for receiving a commission.
In so doing, you may become a party to an offence.
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Types of Financial Frauds
Fake prizes
A perpetrator claims that you have won a non-existent
prize.
You are asked to send a cheque to pay the taxes or your
credit card details, or your account number to pay for
shipping and handling charges to send you the non-existent
prize.
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Types of Financial Frauds
Inheritance scams
You receive a mail from an ‘estate locator’ or ‘research
specialist’ purporting an unclaimed inheritance or refund.
You are lured into sending a fee to receive information about
how to obtain the purported asset.
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Types of Financial Frauds
International lottery fraud
To show good faith, the perpetrator may send you a cheque
which you are instructed to deposit in your account and
send the money back to the lottery committee.
The perpetrator will create a “sense of urgency,”
compelling you to send the money before the cheque, which
is counterfeit, is returned.
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Types of Financial Frauds
Wills and Legacies
A letter or email is sent to you claiming that someone has
died and had mentioned your name in his will.
Usually the scammer will claim to be the deceased’slegal
advisor and may claim an advance fee.
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Protect yourself against
Financial Crimes
Keep all personal information, identity cards and bank
cards safe at all times.
Keep your PIN numbers secret.
Do not write your PIN numbers down or store them with
bank cards.
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Protect yourself against
Financial Crimes
Never give bank account details or other security
information to any person or website unless their identity
and authenticity can be verified.
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Protect yourself against
Financial Crimes
Place your money only at authorized financial
institutions.
Never give your money to people who offer to place
it with a bank on your behalf for a rate of return
higher than the prevailing rate.
Always watch out for newer forms of Financial
Frauds
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Protect yourself against
Financial Crimes
Do not allow yourself to be distracted when using your
bank card. If you notice something wrong or suspicious
with an ATM, please report it.
Do not let anyone else use your card.
Check monthly credit cards statements and other bank
statements carefully for suspicious transactions.
Protect yourself against
Financial Crimes
Report promptly the theft or loss of your card on
the 24-hour telephone numbers that most issuers make
available for free.
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Protect yourself against
Financial Crimes
Exercise care when using your card to make
payments on the internet. Make sure that
disclose your Card Verification Value you
only in secure
payment websites.
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Protect yourself against
Financial Crimes
Be careful when signing any financial contract. Read the
small print carefully, and ask for clarifications and advice
from independent sources if needed.
Beware of calls, letters, e-mails or faxes asking for your
help to place huge sums of money in an overseas bank.
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Protecting yourself against
Financial Crimes
Be suspicious of any job advertised by spam or
unsolicited e-mails. Legitimate companies do not send
spam. If the 'job' offered involves handling money -
receiving or transferring funds or payments, it could be
'fake check' scam.
Do not reply to spam or unsolicited e-mails that promises
you some benefit.
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Helpline Resources and
Helpline Numbers
Various organizations provide support to individuals who fall victim to financial scams and frauds. Here are some
key resources:
•National Cyber Crime Reporting Portal (India)
Website: https://cybercrime.gov.in
Helpline Number: 155260
•Consumer Financial Protection Bureau (USA)
Website: https://www.consumerfinance.gov/
Helpline Number: 1-855-411-2372
•Federal Trade Commission (FTC) - Fraud Report (USA)
Website: https://reportfraud.ftc.gov/
Helpline: 1-877-382-4357
•Action Fraud (UK)
Website: https://www.actionfraud.police.uk/
Helpline: 0300 123 2040
•National Consumer Helpline (India)
Helpline Number: 1800-11-4000
•Financial Fraud Enforcement Task Force (USA)
Website: https://www.stopfraud.gov/
Helpline: 1-800-221-8100
Cyber Security Cell
A Cyber Security Cell is a government agency or police unit that
deals with cybercrimes, including financial frauds conducted over
the internet. These cells help investigate, prevent, and prosecute
cyber-related crimes, and they assist individuals who have fallen
victim to online scams.
In India, for example, the Cyber Crime Cells in various states
work alongside the Cyber Crime Reporting Portal to address
online financial frauds, including hacking, phishing, and identity
theft. Similarly, in other countries, law enforcement agencies such
as the FBI (USA) and the National Crime Agency (UK) have
dedicated cybercrime units.
Useful Cyber Security Links:
•Indian Cyber Crime Coordination Centre (I4C):
https://www.cybercrime.gov.in/
