Best Tips to Avoid Online Frauds

Consumers aren’t the only ones who are affected by online fraud, banks, and other financial firms involved in financial fraud hurt their reputation as well. With the increased number of fraud cases and data breaches at major retailers, to increased cases of fraudulent emails, businesses and customers are at constant risk of online fraud. Tons of online safety guidelines that improve customer safety can also protect businesses from all sorts of fraud. Mitigating online fraud is a vital part of providing efficient customer services.

An organization’s only responsibility is not to just protect the customers, they also have to set up compliance processes. Company-wide KYC & AML compliance can help businesses protect themselves from internal fraud and sensitive company data. Companies with dedicated IT departments try their best to protect businesses from cyberattacks and take crucial precautions against fake business documents. Businesses need to be aware of the best practices that will help them detect and mitigate fraud.

Types of Online Fraud

Phishing Email Scams

More than one-third of all online frauds start with phishing emails that are sent to businesses and consumers. Over time, phishing scams have evolved as customers & businesses have started getting smarter. Bad actors with good enough emails are enough to scam the consumers and businesses. The effects of phishing scams are drastic so it’s essential for businesses to learn how to detect emails.

Most of these emails seem like they come from an original source. Fraudsters can even use such emails to trick businesses that can lead to huge financial losses. Most of these phishing email scams are easy to detect if paid enough attention.

Bank Loan or Credit Card Scam

Thousands of customers every year are easily scammed by fake bank offers that are too good to be true. These offers guarantee large amounts of money and loans pre-approved by the bank. Similarly, banks receive tons of loans and credit card applications from bad actors. Fraudsters use a series of fake documents such as fake utility bills for proof of address. They also create synthetic identities to bypass the customer verification process.

Lack of proper customer verification solutions and document verification leads to an increased level of fraud. Banks, lenders, financial institutions have to be wary of bank loans and credit card scams.

Money Transfer Scams

Although money transfers are super easy to send money to someone electronically, they can be incredibly risky if you don’t know who you’re sending money to. Transferring funds or “wiring” funds is just like sending cash to the other party. Money transfer is a quick process and once the money is gone, there’s no way to reverse the transaction or trace the money. That’s why money transfers are a magnet for online fraudsters.

To make sure you don’t fall victim to this type of scam, it is wise to never transfer money to people you don’t know personally. Fraudsters can assume the identity of government officials, or sellers, or someone insisting on payment from a business.

Another method scammers may take advantage of is by appealing to the generosity of the people by posting an online charity.

Identity Theft

Identity theft is the crime of stealing someone’s personal or financial information. Using this information, fraudsters can commit all types of fraud. Identity theft is committed in several ways and the victims are left with a huge debt, damaged credit, and reputation.

Identity theft happens when someone steals your personal information, including your social security number, bank account number, and credit card information. Once fraudsters gain access to the information, it is enough to ruin the victim’s credit rating. Identity theft has different types too:

Financial identity theft
Social security identity theft
Medical identity theft
Synthetic identity theft
Tax identity theft
Criminal identity theft

Tips to Protect Against Online Fraud

Millions of users every year fall prey to online fraud. The online fraud rate rose a staggering 46% in 2020 compared to 2019. It is vital for businesses and consumers to use trusted networks and wireless networks. Here are the best tips to protect against online fraud:

Keep your computers, mobile devices up to date. Using the latest software, web browsers and operating systems are the best way to protect against malware and other cybercrime. Turn on automatic updates so you get the latest fix as soon as they become available.

Use strong passwords. A strong password must have at least 8 characters and should include upper and lowercase letters, numbers, and special characters.

Keep an eye out for phishing scams. Phishing scams use fraudulent emails and websites that trick users into sharing their private accounts or login information. Forward any phishing emails you receive to the Federal Trade Commission (FTC) using the email ID [email protected].

Fraudsters can use personal information to gain access to different bank accounts. Try to keep your information as personal as possible. Fraudsters often steal personal information from social media platforms to answer Knowledge-based questions of bank’s login systems. Avoid privacy settings and avoid posting things like birthdays, addresses, mother’s maiden name, and so on.

Secure your internet connection. Try not to do sensitive activities like bank transactions on a public network. Public connections are usually full of fraudsters that lurk behind the screens to steal information.