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Types of Banking Frauds – How to Prevent Them

Types of Banking Frauds - How to Prevent Them

The world isn’t all so pleasant and righteous as we think. If it was, people would never be duped or get frauded. Sometimes, it is often the greed which makes people fall in these traps, or sometimes just the lack of knowledge makes them the victims of banking frauds. Moreover, these banking frauds are not limited to any specific city, but rather in tier-3 cities too, where there isn’t much knowledge.

So, in this blog post, we’ll cover the most popular banking frauds in which people have lost quite a lot. This would make you wiser and remain safe from such fraudulent activities.

Card Scams:

  1. So, one of the very popular banking frauds is the card scams that happen. These scams could come to you as the face of multiple ways. Let’s address this one by one.
  1. You receive calls/messages from unsolicited/unrecognised bank numbers where the caller tells you that your debit/credit card has expired, and you need to give them OTP to activate it again.
  2. One of the other ways, these scammers can dupe you is by luring you with information like your limit has increased and you need to provide them with the OTP.
  3. Sometimes, you get a call from a number identical or same as the one given on the official bank documents, and they would ask for OTPs for some reason. Even if the number is the same, a bank personnel would never ask for any OTP, as per bank guidelines.

How to save yourself from these banking frauds: Never share your OTP or PIN ever, despite how genuine the caller seems. Its best to go to a bank physically and then reaffirm.

Lottery Scam:

  1. This is one of those banking frauds in which people have lost a lot of money due to their greed. In these frauds, a caller says that you’ve won a lottery and asks for your bank account details, to get the amount credited. When you provide the details, you get an OTP and if you provide them with that the amount gets debited from your account in an instant. This type of scam even happens over email and in person too, where they seem identical to reputed company email and people.

How to save yourself from these banking frauds: Being realistic there is no chance of you winning a lottery, if you haven’t applied in any such schemes. So be very vigilant about these scammers.

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Advance Payment Scam:

  1. In these banking frauds, the scammers find your contact from marketplace where you have placed some advertisements. It also might be the other way round where you would have replied to their advertisements. They sound very interested in the deal and after having some conversation, they say that they’re making an advance payment, but instead initiate a debut transaction message, where as soon as you submit after putting in your PIN, amount gets debited from your account.

How to save yourself from these banking frauds: Be vigilant about the transaction message/requests you receive and check if they are of debit or credit. You never have to enter your PIN or do a transaction to receive money. Also, identify whether the transaction is a request or merely a message, as sometime scammer dupe people by sending a message of credit, but there was never any credit that was made.

New Account with Insurance Scheme

These fall under a new type of banking fraud, where the real bank professionals tell you that to open a new account in their bank, the customer needs to buy an insurance policy alongside. As per Banks and IRDAs statements, there is no such policy, and such banks are to be penalised if they are pushing this voluntary scheme alongside new account creation.

How to save yourself from these banking frauds: If any bank cites that insurance is mandatory for a new account creation, simply tell them that there is no such mandate and show them the circular from IRDA.

Fraud loans in your name: These banking frauds, are one of the scariest as the scammers obtain people’s Aadhar and PAN from various sources and then use those details to take a loan in their names. This way, they dupe those people as due to non-payment of EMIs from these scammers, their credit scores of people take a slide and goes for a toss by the time, they identify that they have been scammed.

How to save yourself from these banking frauds: Always check your active loans from CIBIL website and report them if they have not been taken from you, or the data in actual one seems suspicious.

AT1 Bonds: These are one of the riskiest bonds to invest into. Additional Tier 1 or AT1 bonds are perpetual or lifetime bonds with no maturity date. In these bonds, the principal amount is never returned to the investor, with the promise of interest continuing forever. However, if the bank writes off this bond, then the interest payment would also be gone. One of the most recent examples was with YES Bank. When mis-sold by bank personnel, this becomes of the banking frauds.

How to save yourself from these banking frauds: Always investigate and question your investment advisor before investing into any instrument and understand what the consequences might be if anything goes wrong.

Career Scams: In these type of banking frauds, the scammers send emails and/or call people and tell them that they have been selected in reputed companies. Then they ask for a token amount for the conduction of the interview, which gets promised for reimbursement from their end after selection. This is clearly a scam as no reputed company would ask for a payment for conducting interviews.

How to save yourself from these banking frauds: Always cross check the email from which you’ve been sent the offer letter. If they seem any suspicious, don’t move forward and if they ask for payment, it is a big red flag.

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Our blogs are made for educational purposes only, and we do not provide investment recommendations. We are not SEBI-registered advisors and do not accept cryptocurrency payments. We present publicly available facts and data, not favoring any company.

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