Home » What are the types of banking fraud and how to prevent them?

What are the types of banking fraud and how to prevent them?

What are the types of banking fraud and how to prevent them?

Photo courtesy Mohamed-Hassan on Pixabay.

We all depend on banks for the various financial transactions we make. They are a part of our life, be it for depositing or withdrawing money, investment instruments like fixed deposits, or even taking loans and investments in financial products like mutual funds.  There has been an increase in digital transactions over the past few years and this has led to a rise in digital frauds. A person should be aware of banking fraud so that they are able to operate carefully and take precautions before making financial transactions.

1) Frauds due to screen sharing app-

Fraudsters trick a person to download screen sharing app and they can have access /control of the person’s mobile/laptop. This way they can gain access to all the financial information and carry out transfers of funds using the person’s payment apps/ internet banking.

2) Fraud due to QR code scan-

The fraudsters contact a customer and trick them into scanning the QR (quick response) codes using the app on the customer’s phone. This way the customer unknowingly authorizes the fraudster to withdraw money from their account.

3) Phishing-

Phishing is used to steal data that includes login details and credit card numbers. It occurs when a fraudster acting as a trusted entity tricks a person into opening an email, text message, or instant message. This attack earned its name because like fishing it uses bait. The bait could be an impressive email and the attackers ensure it appears to be legitimate. These emails direct recipients to the fraudster’s website that has malware and intercepts the credentials.

The fraudsters create a website that appears to be similar to a bank’s website and distribute the links to these websites by SMS, email, social media, and other means. The clients click on the links without checking the URL and enter their details like their Personal identification number (PIN) and one-time password (OTP) and these are misused by the fraudsters.

4) Vishing-

Vishing uses the phone to gain the personal confidential information of the victims. Fraudsters act as bankers, insurance agents, and government officials and approach customers on the phone or on social media and disclose a few facts like the customer’s name or date of birth to gain trust. They pressure or trick the victims to share confidential information like passwords, OTPs, PINs, and CVVs (card verification values) by stating that they need to block an unauthorized transaction. The criminals use threats and persuasion to convince the victim that they have no other option than to provide the details being asked. The other tactic is to leave threatening voicemails to tell the recipient to call back immediately to prevent being arrested or the bank accounts closed. The customers are defrauded once the credentials are obtained.

5) Juice Jacking-

In juice jacking the infected USB charging station is used to infect the connected devices. Juice jacking could prove to be a threat at shopping malls, airports, and other public places that provide free charging services for mobile phones. The fraudster uses a USB connection to load malware onto the charging station or infect a cable and leave it plugged so that some unsuspecting person will use the cable. This way they steal sensitive data like emails and passwords from the customer’s mobile phones.

6) Frauds through online sales platforms-

On online sales platforms, the fraudsters pretend to be customers/ buyers and display interest in the seller’s products. They pretend to be defense personnel posted in a remote location and gain confidence. Instead of paying money to the seller they use the UPI app “request money” option and insist that the seller approve the request by entering UPI PIN. Whenever the seller enters the PIN, the money is transferred to the fraudster’s account.

7) ATM card Skimming-

ATM skimming is a type of fraud where the fraudsters steal PINs and other information associated with the credit and debit cards using hidden recording devices. The stolen information is used by the thieves to produce fake cards and they spent the victim’s money. The thieves try to steal information that is embedded in the magnetic stripe on the credit and debit cards. This can be done by using a plastic overlay over the ATM keypad that captures PINs when they are entered or overlay placed at the card insertion slot that records data on the magnetic stripe or tiny cameras placed on the ATM that record the keypad entries as you type.

8) SIM swapping-

Sim swapping occurs when a person pretending as a cardholder contacts the mobile carrier and informs them that the original card was lost or destroyed and wants a new card to be activated for the account. The mobile carrier will request identity verification and the criminal gets the phone number reassigned to their SIM. They can now access their accounts, email, social media, and digital payment systems. Fraudsters use the OTP received on duplicate SIM to carry out unauthorized transactions.

9) Frauds through search engines-

People use search engines to obtain details of the customer care/ contact details of their bank, insurance company, etc. and the contact details on search engines do not belong to the entities they are searching for. These people end up contacting unverified contact numbers of the fraudsters displayed on the search engine. The customer calls on these contact numbers and the fraudsters ask for the card’s details for verification. Once the customer shares the details they fall prey to the frauds.

These are the banking fraud that a common man should be aware of. Being aware will make them be careful in all the transactions and the precautions taken will result in the prevention of stress that occurs as a result of these scams.

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