Identifying and Dealing With Financial Fraud: All You Need To Know

Reviewed by: Amit Saraf

  • Updated on: 29 Jan 2024
  • Published on: 18 Jan 2024
Identifying and Dealing With Financial Fraud: All You Need To Know

Identifying and dealing with financial fraud on time is essential to protect your finances. Nowadays, scammers are using various methods to steal your hard-earned money. Knowing about these different types of fraud can help you spot them on time and stay clear of them. 

So, read on to learn more about financial scams and how to deal with them.

What is Financial Fraud?

Financial fraud occurs when a scammer steals your money and other assets through misrepresentation, deception and illegal practices, which ultimately leads to financial loss. There are various types of fraud, such as:

  • Online shopping fraud
  • Credit card and loan fraud
  • Investment fraud
  • EMI fraud
  • Advance fee fraud
  • Tax refund fraud
  • Identity theft
  • Bank account fraud

Also Read: Fake Loan Apps: What Are They and How to Identify Them?

Ways to Identify Potential Financial Fraud

Here are some tips to spot common fraud and deal with them:

  1. Checking the Benefits Offered

Most fraudsters offer perks that are too good to be true in a bid to attract you. They gain your trust and harm your financial health by offering extraordinary deals and investment opportunities.

Steer clear of such marketing gimmicks if you notice advertisements that include:

  • Guaranteed high returns
  • Double your investment
  • Zero-risk investment

To protect yourself from such fraud, follow these tips:

  • Ask for official documents 
  • Cross-check the information
  • Verify the identity of the service provider
  1. Verifying Email ID and Numbers

Another way of staying protected from fraud is noticing the medium of contact. Fraudsters often create fake email addresses to contact you. They may also call you from various numbers. A recent type of fraud includes fraudsters calling you and asking for money in the name of your friends and family.

Follow these tips to stay protected:

  • Check the email address domain
  • Notice the display name of the sender
  • Hover over links and attachments, but do not open them
  • Look for grammatical mistakes
  • Check the phone numbers on a caller ID checker
  1. Evaluating Documents

A red flag that can help you spot fraud is the documents the fraudsters provide, which, in most cases, you can’t cross-check. To scam you, fraudsters can create fake documents such as:

  • Brochures
  • Account statements
  • Bank notices
  • Misleading advertisement material
  • Terms and conditions

These scams are common in the case of bank accounts. Fraudsters contact you as bank representatives and scam you by showing fake documents, which helps them gain your trust. Here are some tips that you can follow to avoid such instances:

  • Cross-check notices and information from the bank
  • Don’t make payments without confirming with the bank
  • Keep your financial information private
  • Check for unauthorised transactions from your account
  1. Assessing Freebies and Special Privileges Offered

Fraudsters that scam you on the pretext of selling financial products generally offer exciting freebies and privileges. This is true, especially in the case of credit cards, where they offer various benefits as their selling points. Before purchasing any financial product from an agent, visit the provider’s official website and confirm the information with their representatives.

To stay protected, avoid the following types of advertisements from non-authorised entities:

  • Free subscriptions
  • Introductory offers
  • Limited time offers
  1. Reviewing Transaction Amount and Mode

Another way to catch financial scams is to notice the transaction amount and the transfer mode. Since these types of fraud are illegal, fraudsters look for ways to split the payments to avoid getting under the authorities’ radar. Avoid making any payments in case they request the following:

  • Multiple smaller transactions instead of a single transaction
  • Requesting money in different bank accounts or phone numbers

Ways to Deal with a Financial Fraud

If you become a victim of a fraud, here are steps that you can take to control the damage:

  • Stop further payments
  • Collect proof of transactions
  • Contact your bank to stop unprocessed payments
  • Change your PINs and passwords
  • Report to the concerned authorities
  • Check your insurance to recover the lost assets

Now that you know how to avoid financial fraud, take proactive steps to protect your finances. Today, there are various frauds in the loan and credit card industry as well. While getting credit, you need to be vigilant and choose a trustworthy institution.

One such lender you can consider is Fibe. With ISO/IEC 27001 Certification and PCI DSS App-based journey, you can safely get an Personal Loan of up to ₹5 lakhs. You also need to meet minimal requirements and pay zero foreclosure fees. Download the Fibe Personal Loan App or log in to our website for 100% digital application and seamless access to funds. 

FAQs on Financial Fraud

How do you detect financial fraud?

Here are some common characteristics of financial scams:

  • Offering benefits that are too good to be true
  • Providing free products and services and exclusive privileges
  • Asking you to transfer funds in smaller amounts or multiple accounts
  • Contacting through suspicious email addresses and phone numbers
  • Documents that you can’t verify and cross-check

How do you deal with financial fraud?

Here are some tips you can rely on:

  • Updating your PINs and passwords
  • Collecting proof of transactions
  • Contacting your bank to stop unprocessed payments
  • Checking your insurance to recover the lost assets
  • Reporting the incident to the authorities

What are the methods of preventing financial fraud?

Check out some tips to stay protected from fraud:

  • Educate yourself about common types of fraud
  • Check the contact information of the sender
  • Cross-check information before making or authorising payments
  • Stay away from benefits and freebies that are too good to be true
  • Avoid clicking on unknown links
  • Update your PINs and passwords regularly

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