Financial scams are skyrocketing: Here’s how to outsmart fraudsters and protect your money

Financial scams have become increasingly sophisticated in today’s fast-evolving digital landscape, targeting unsuspecting individuals. Picture receiving an urgent call from someone claiming to be a bank official, warning you of suspicious activity on your account. In a state of panic, you share your personal details, believing securing your funds is necessary. Unfortunately, you’ve just fallen prey to a well-orchestrated fraud.

According to data presented in the Rajya Sabha by the Ministry of Finance, digital financial frauds accounted for a staggering ₹4,245 crore between April and January of the 2024-25 fiscal year, involving 2.4 million cases. This concerning statistic underscores the growing menace of financial fraud, ranging from UPI scams and QR code frauds to counterfeit investment schemes. As fraud tactics evolve, safeguarding personal financial information has never been more critical.

With fintech companies leveraging technology and collaborating with regulatory bodies to curb fraudulent activities, individuals must also take proactive steps to shield themselves from financial scams.

How to spot a scammer

Scammers employ various deceptive strategies to manipulate their victims. Whether by impersonating officials, creating fake websites, or sending fraudulent emails, their goal remains the same: to trick people into handing over their money. Neha Shivran – Co-Founder and Chief of Growth & Data Science, Kissht explains some common warning signs:

• Unexpected Contact: Be wary of unsolicited calls, emails, or messages, especially from unfamiliar sources. Genuine financial institutions rarely reach out without prior communication.

• High-Pressure Tactics: Scammers create urgency, pushing victims to act immediately to avoid penalties or seize a “limited-time” offer. Legitimate businesses do not operate this way.

• Requests for Sensitive Information: Be skeptical if asked to share personal or financial details such as passwords, PINs, or OTPs. Authentic organizations will never demand such information through calls, emails, or texts.

• Too-Good-To-Be-True Offers: Promises of guaranteed high returns with minimal or no risk are often red flags. If an investment scheme seems overly lucrative, it’s likely fraudulent.

• Fake Tech Support Alerts: Be cautious of unsolicited messages claiming that your device is compromised. Fraudsters may attempt to gain remote access or trick you into installing malware.

• Demands for Payment via Gift Cards or Cryptocurrency: Scammers frequently request payments through irreversible methods like gift cards, wire transfers, or digital currencies. Once transferred, retrieving the money is nearly impossible.

• Threats and Intimidation: Fraudsters often resort to fear tactics, claiming legal action or account suspension if immediate steps aren’t taken. Recognize that legitimate companies do not use coercion.

Preventing financial scams

Preventing fraud requires staying informed and adopting security measures to protect your finances. Here’s what you can do:

• Educate Yourself: Stay updated on the latest scam trends and fraud techniques. Government agencies and financial institutions regularly provide resources to help consumers stay informed.

• Verify Before Sharing Information: Always confirm the identity of individuals or organizations requesting sensitive details. Authentic institutions never ask for passwords or PINs via phone or email.

• Be Cautious with App Downloads: Download apps only from official sources and ensure they comply with regulatory standards such as those set by the Reserve Bank of India (RBI).

• Strengthen Passwords: Use complex and unique passwords for financial accounts, incorporating letters, numbers, and special characters to enhance security.

• Enable Two-Factor Authentication (2FA): Activate 2FA for added security, requiring an additional verification step (like an OTP or notification) to access your accounts.

• Stay Alert to Phishing Attempts: Do not click on suspicious links in emails or messages. Verify the sender’s authenticity before responding to unexpected requests for information.

• Secure Your Devices: Regularly update software, install security patches, and use antivirus protection to prevent cyber threats.

• Avoid Public Wi-Fi for Financial Transactions: Conduct banking and sensitive transactions on secure networks. If using public Wi-Fi, consider a Virtual Private Network (VPN) for encrypted connections.

Steps to take if you are a victim of fraud

If you realize you have been scammed, acting swiftly can help minimise the damage, Shivran explains what you should do:

1. Notify Your Bank: Immediately contact your bank to report unauthorized transactions and secure your account.

2. File a Complaint: Report the incident on the National Cyber Crime Reporting Portal and inform law enforcement authorities.

3. Gather Evidence: Save all communication records, transaction details, and screenshots related to the scam.

4. Monitor Your Accounts: Keep a close watch on financial statements and online banking activities for any further fraudulent activity.

Stay vigilant and stay protected

With fraudsters continually refining their tactics, staying vigilant is the best defence. While fintech companies work on strengthening security measures, individuals must take responsibility for safeguarding their financial well-being. By recognising warning signs and adopting security best practices, you can protect yourself from falling victim to financial scams.