Fraud Explained
John Doe just received an email for a job opportunity, how exciting! He was offered a job as a Mystery Shopper for a quickly growing financial service provider on the island. The email provided a link for John to accept the job by registering with his bank account information and paying a one-time fee to the recruitment company. John always wanted to gain experience in the financial services sector and in all of his excitement, John quickly clicked the link and began the process. As he read the online form, he realised that he would be required to wire funds to the company to ensure that the process is smooth and that the recruiter would provide the funds to him. He paused and remembered the Central Bank’s radio advertisement about something similar. Before he submitted the form, he asked himself a few questions:
Did I apply for this job?
Why was there no interview before I received this offer?
Why are they asking me for a one-time payment if they are hiring me?
Where would this money be coming from for me to wire?
To whom would I be wiring this money?
After thinking about these questions, John decided not to submit the form and contacted the Central Bank for assistance. Luckily, he avoided a serious money laundering offence; he was almost a victim of fraud!
What is fraud?
Fraud is an illegal activity whereby a criminal (or fraudster) intentionally deceives innocent consumers into losing their hard-earned money by using different tricks and deceptive practices. The fraudster makes money by misleading consumers, and usually targets vulnerable groups, such as the elderly. In the example above, the fraudster was the recruitment company and John Doe would have lost money by paying the one-time fee and possibly be responsible for money laundering, which is a serious criminal activity.
What are some types of fraud?
Fraudsters are usually very creative with their techniques and are always finding new ways to financially hurt innocent people. To help you identify various scams, here are some common types of fraud activities to look out for:
Phishing Scams
Phishing scams involve fraudsters using email or text messaging as a way to obtain personal financial information from a consumer. Criminals create emails, logos, and websites that mimic those of legitimate agencies, and they usually try to obtain information that helps them gain access to your money, such as passwords to online bank accounts, credit card numbers, personal identification numbers, and answers to security questions. Phishing emails are tricky because they usually appear to be sent from reputable organisations; however, with a little due diligence, you can spot some of them easily. Some things to look out for are:
Fraudsters usually use scare tactics to bait you into a phishing trap – be cognizant of emails or text messages stating that your account has been hacked.
Fraudsters sometimes have spelling errors in their emails and text messages.
Spelling of the financial institution’s email address may be off; for example, instead of info@abcbank.com, it may be spelled info@abcbanks.com.
You may be asked to provide personal information via email. This is usually a telltale sign because professional organisations do not practice this.
Credit Card Fraud
Credit card fraud is the unapproved use of a credit or debit card to gain access to someone else’s money. In some cases, the owner authorizes the use of the card; however, it is still considered fraud because the consumer was deceived into believing that there was a legitimate and safe transaction taking place. Card information is sometimes stolen through unsafe websites, fraudulent card machines, or high tech hacking of financial institutions.
Mystery Shopping Scams
The story above is an example of a mystery shopping scam. These scams promise jobs of anonymously shopping at financial institutions for honest reviews. The recruiter usually requires that the consumer pay an upfront fee in order to benefit from the opportunity. Another popular trait of these scams is being asked to wire money or deposit fraudulent cheques to various accounts; this can cause more than financial harm because you may also be liable for money laundering offences. Legitimate mystery shopping jobs do not ask for a fee to be paid and are advertised through reputable platforms.
Contest or Prize Scams
These scams usually promise a non-existent prize in exchange for a fee. For example, you may be contacted via phone, email, or social media to notify you that you won a prize for a contest. However, before you can receive the prize, you are told that you need to pay certain fees and/or give personal banking information before receiving the prize, and usually there is no prize once the fraudsters gets what they want.
How can I protect myself from fraud?
There are a few ways that you can protect yourself from fraudulent activities, including:
Analyse all financial opportunities. Ask yourself important questions, such as:
Why do I have to give out my personal financial information?
Is this company legitimate?
Why do I need to pay for a prize that is being promised?
Scan emails for improper spelling and/or grammar, and avoid clicking any suspicious links.
Protect personal identification numbers and other important passwords.
Do NOT lend your credit and debit cards to others, including family and friends.
Be careful sharing personal information that can be used to guess security questions on social media and other platforms.
Be mindful of where you use your credit and debit cards.
Do not use suspicious ATMs.
Check account and credit card statements regularly.
Notify your bank immediately if you notice unusual or unauthorized transactions.
Report stolen cards immediately.
Practice due diligence! Research websites and organisations before acting financially.
Avoid using public Wi-Fi networks, such as airports and coffee shops, when signing into your financial accounts; these are hunting grounds for fraudsters.
To learn more about protecting yourself from fraud in the digital age, check out our articles Top 10 Cybersecurity Tips for Online Banking and Understanding Digital Banking.
When it comes to fraud, the old age saying is usually spot-on: “If it sounds too good to be true, it probably is”. In the fast-paced digital age, there are many financial opportunities for you and unfortunately, for fraudsters too. However, you can GET MONEY SMART by understanding the types of fraud and following the tips in this article!