Check that your money goes directly to investment
When using a financial adviser to invest your money, you must be sure that the investment you choose – such as a unit trust or money market fund – is recognised by the Security Exchange Board of India and that your money goes directly into your chosen fund and not into your adviser’s bank account.
Check your Credit Card Statements regularly
Recent widespread scams have involved small, unauthorized charges on credit cards that are easily overlooked by cardholders.“Scammers hope that consumers will overlook the small charge on their monthly statements or not review the statements at all,
Consumers should closely review their monthly credit card statements. If you find an unauthorized charge on your statement, immediately contact your financial provider (using the number on the back of the credit card) to report the fraud and to request a new card.
ATM skimming
how easy is it for somebody to do that? Not just to get your credit card or your debit card, but to have the PIN number as well?
here's a lot of ATMs skimming going on, and not just ATM skimming but different devices that accept cards. There's generally two components to every skimming operation, so there's the part that steals your card number - the data that's stored in ones and zeroes on the magnetic stripe on the back of your card. And the way that works is the thieves usually put a fake card acceptance slot right over top of the where you insert your card into the ATM.
And the second component, of course, is designed to steal your PIN. And it usually involves a hidden camera somewhere. Now, that could be a hidden camera that's tucked into the actual fake card acceptance slot with a little hole - PIN hole pointed toward the PIN pad. Just as common as a fake panel directly above the PIN panel that's angled down, and it records your PIN. Sometimes they'll hide the camera in like a fake brochure rack or something like that. But those are generally the ways that most of these cards are skimmed.
How to prevent ARM skimming: The best thing that you can do is when you go to pull money out of the cash machine, just cover the PIN-pad with your hand
Telemarketing Frauds
Murari's wife Neha received a call from a 'bank executive' who managed to coax Neha to spell out the 16-digit ATM card number and security PIN. Between 10.40am and 11.34am on Wednesday 12 illegal transactions were carried out and Mishra lost about Rs 17,000.
Tip : Save bank's customer care number in your mobile phone.Call up the bank's customer care number directly on being approached by suspicious callers instead of parting with details
When you send money to people you do not know personally or give personal or financial information to unknown callers, you increase your chances of becoming a victim of telemarketing fraud.
What a caller may tell you:
- “You must act ‘now’ or the offer won’t be good.”
- “You’ve won a ‘free’ gift, vacation, or prize.” But you have to pay for “postage and handling” or other charges.
- “You must send money, give a credit card or bank account number, or have a check picked up by courier.” You may hear this before you have had a chance to consider the offer carefully.
- “You don’t need to check out the company with anyone.” The callers say you do not need to speak to anyone including your family, lawyer, accountant, local Better Business Bureau, or consumer protection agency.
- “You don’t need any written information about their company or their references.”
- “You can’t afford to miss this ‘high-profit, no-risk’ offer.”
If you hear these or similar “lines” from a telephone salesperson, just say “no thank you” and hang up the telephone.
Identity Theft
Identity theft occurs when someone assumes your identity to perform a fraud or other
criminal act. Criminals can get the information they need to assume your identity from a variety of sources, including by stealing your wallet, rifling through your trash, or by compromising your credit or bank information. They may approach you in person, by telephone, or on the Internet and ask you for the information.
criminal act. Criminals can get the information they need to assume your identity from a variety of sources, including by stealing your wallet, rifling through your trash, or by compromising your credit or bank information. They may approach you in person, by telephone, or on the Internet and ask you for the information.
Tips for Avoiding Identity Theft:
- Never throw away ATM receipts, credit statements, credit cards, or bank statements in a usable form.
- Never give your credit card number over the telephone unless you make the call.
- Reconcile your bank account monthly, and notify your bank of discrepancies immediately.
- Keep a list of telephone numbers to call to report the loss or theft of your wallet, credit cards, etc.
- Report unauthorized financial transactions to your bank, credit card company, and the police as soon as you detect them.
- Review a copy of your credit report at least once each year. Notify the credit bureau in writing of any questionable entries and follow through until they are explained or removed.
- If your identity has been assumed, ask the credit bureau to print a statement to that effect in your credit report.
- If you know of anyone who receives mail from credit card companies or banks in the names of others, report it to local or law enforcement authorities.
Courier Fraud
It is s one of the most sophisticated bank frauds – one that targets older women in well-off areas.
courier fraud is where scammers phone the victim, purporting to be from their bank, the police, or another law enforcement agency. They then dupe the person into withdrawing a large sum and handing it to a courier or taxi driver, who may not know they are being used as part of the scam.
The victim is asked to assist with a police investigation, or told there is a corrupt member of staff in the bank and asked for help to identify them. The victim is told the money will be "marked" and collected. They may be asked to ring the number on the back of their card, convincing them the call is genuine
The figures show the average age of a victim was aged 54, and nearly two thirds of victims were female
Case Law :
In the Granner's case, the caller rang her in February to say that someone had siphoned Rs 1,000 out of her accounts and asked whether she had authorised the transactions. Greatly alarmed, she was persuaded she must immediately transfer her remaining balance into a new account that had been set up for her.
Her Family says she was not asked for her pin, and knew not to give it to anyone. The conmen were so convincing that they persuaded Grange – who suffers from poor health and requires a stick to go any distance – to walk from her flat to her bank branch . There, she stuck to the line she had been given that she was not to discuss the matter with the cashiers, as they might be the fraudsters.
Bank Refused to pay the money as it was not a fraud involving a credit or debit card, nor did it involve a third party withdrawing funds from her account. She Willingly handed over the money". . However, she did so because she genuinely believed bank had instructed her to, and because she was too elderly and unwell to realise she was being duped," says Grange's daughter.
Tips to Avoid
- It is better to be extra vigilant and in the case of suspicious or unexpected calls, always verify the caller using an independently checked telephone number and using a different phone line.
Microsoft support scam
Case Law :
Mohammed Khalid Jamil, 34, from Luton, hired people in an foreign call centre who then phoned up people in the UK, pretended to be from Microsoft, and claimed that there was a problem with the victim's computer - which they would "confirm" by getting them to look at a perfectly harmless Windows program which records machine events.
The cold-callers would then sell the victims antivirus software that was available for free from Microsoft's website, and install it using remote access to the victim's computer. People were typically charged between £35 and £150, and many of the victims were elderly.
Internet Dating Scam
It involved women being asked to give "significant" amounts of money after meeting men on the particular website.
Advance Fee Schemes
An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a lottery winnings,loan, contract, investment, or gift—and then receives little or nothing in return.
Clever con artists will offer to find financing arrangements for their clients who pay a “finder’s fee” in advance. They require their clients to sign contracts in which they agree to pay the fee when they are introduced to the financing source. Victims often learn that they are ineligible for financing only after they have paid the “finder” according to the contract. Such agreements may be legal unless it can be shown that the “finder” never had the intention or the ability to provide financing for the victims.
Tips for Avoiding Advanced Fee Schemes:
If the offer of an “opportunity” appears too good to be true, it probably is. Follow common business practice. For example, legitimate business is rarely conducted in cash on a street corner.
- Know who you are dealing with. If you have not heard of a person or company that you intend to do business with, learn more about them. Depending on the amount of money that you plan on spending, you may want to visit the business location, check with the Better Business Bureau, or consult with your bank, an attorney, or the police.
- Make sure you fully understand any business agreement that you enter into. If the terms are complex, have them reviewed by a competent attorney.
- Be wary of businesses that operate out of post office boxes or mail drops and do not have a street address. Also be suspicious when dealing with persons who do not have a direct telephone line and who are never in when you call, but always return your call later.
- Be wary of business deals that require you to sign nondisclosure or non-circumvention agreements that are designed to prevent you from independently verifying the bona fides of the people with whom you intend to do business. Con artists often use non-circumvention agreements to threaten their victims with civil suit if they report their losses to law enforcement.
Health Care Fraud or Health Insurance Fraud
Medical Equipment Fraud:
Equipment manufacturers offer “free” products to individuals. Insurers are then charged for products that were not needed and/or may not have been delivered.
“Rolling Lab” Schemes:
Unnecessary and sometimes fake tests are given to individuals at health clubs, retirement homes, or shopping malls and billed to insurance companies or Medicare.
Services Not Performed:
Customers or providers bill insurers for services never rendered by changing bills or submitting fake ones.
Medicare Fraud:
Medicare fraud can take the form of any of the health insurance frauds described above.
Senior citizens are frequent targets of Medicare schemes, especially by medical equipment
manufacturers who offer seniors free medical products in exchange for their Medicare
numbers. Because a physician has to sign a form certifying that equipment or testing is
needed before Medicare pays for it, con artists fake signatures or bribe corrupt doctors to
sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or was not ordered.
Senior citizens are frequent targets of Medicare schemes, especially by medical equipment
manufacturers who offer seniors free medical products in exchange for their Medicare
numbers. Because a physician has to sign a form certifying that equipment or testing is
needed before Medicare pays for it, con artists fake signatures or bribe corrupt doctors to
sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or was not ordered.
Tips for Avoiding Health Care Fraud or Health Insurance Fraud:
- Never sign blank insurance claim forms.
- Never give blanket authorization to a medical provider to bill for services rendered.
- Ask your medical providers what they will charge and what you will be expected to pay out-of-pocket.
- Carefully review your insurer’s explanation of the benefits statement. Call your insurer and provider if you have questions.
- Do not do business with door-to-door or telephone salespeople who tell you that services of medical equipment are free.
- Give your insurance/Medicare identification only to those who have provided you with medical services.
- Keep accurate records of all health care appointments.
- Know if your physician ordered equipment for you.
Redemption / Strawman / Bond Fraud
Individuals promoting this scam frequently cite various discredited legal theories and may
refer to the scheme as “Redemption,” “Strawman,” or “Acceptance for Value.” Trainers and
websites will often charge large fees for “kits” that teach individuals how to perpetrate this
scheme. They will often imply that others have had great success in discharging debt and
purchasing merchandise such as cars and homes. Failures to implement the scheme
successfully are attributed to individuals not following instructions in a specific order or not
filing paperwork at correct times.
refer to the scheme as “Redemption,” “Strawman,” or “Acceptance for Value.” Trainers and
websites will often charge large fees for “kits” that teach individuals how to perpetrate this
scheme. They will often imply that others have had great success in discharging debt and
purchasing merchandise such as cars and homes. Failures to implement the scheme
successfully are attributed to individuals not following instructions in a specific order or not
filing paperwork at correct times.
This scheme predominately uses fraudulent financial documents that appear to be legitimate.
These documents are frequently referred to as “bills of exchange,” “promissory bonds,”
“indemnity bonds,” “offset bonds,” “sight drafts,” or “comptrollers warrants.” In addition, other official documents are used outside of their intended purpose. This scheme frequently
intermingles legal and pseudo legal terminology in order to appear lawful. Notaries may be
used in an attempt to make the fraud appear legitimate. Often, victims of the scheme are
instructed to address their paperwork to the . Secretary of the Treasury.
Tips for Avoiding Redemption/Strawman/Bond Fraud:
- Be wary of individuals or groups selling kits that they claim will inform you on to access secret bank accounts.
- Be wary of individuals or groups proclaiming that paying state income tax is not necessary.
- Do not believe that the central bank e.g RBI etc controls bank accounts for all citizens.
- Be skeptical of individuals advocating that speeding tickets, summons, bills, tax notifications, or similar documents can be resolved by writing “acceptance for value” on them.
- If you know of anyone advocating the use of property liens to coerce acceptance of this scheme, contact your local Police office.
Investment-Related Scams
Legitimate letters of credit are never sold or offered as investments. They are issued by banks to ensure payment for goods shipped in connection with international trade. Payment on a letter of credit generally requires that the paying bank receive documentation certifying that the goods ordered have been shipped and are en route to their intended destination. Letters of credit frauds are often attempted against banks by providing false documentation to show that goods were shipped when, in fact, no goods or inferior goods were shipped.
Other letter of credit frauds occur when con artists offer a “letter of credit” or “bank guarantee” as an investment wherein the investor is promised huge interest rates on the order of 100 to 300 percent annually. Such investment “opportunities” simply do not exist.
Tips for Avoiding Letter of Credit Fraud:
- If an “opportunity” appears too good to be true, it probably is.
- Do not invest in anything unless you understand the deal. Con artists rely on complex transactions and faulty logic to “explain” fraudulent investment schemes.
- Do not invest or attempt to “purchase” a “letter of credit.” Such investments simply do not exist.
- Be wary of any investment that offers the promise of extremely high yields.
- Independently verify the terms of any investment that you intend to make, including the parties involved and the nature of the investment.
Prime Bank Note Fraud
International fraud artists have invented an investment scheme that supposedly offers extremely high yields in a relatively short period of time. In this scheme, they claim to have access to “bank guarantees” that they can buy at a discount and sell at a premium. By reselling the “bank guarantees” several times, they claim to be able to produce exceptional returns on investment. For example, if Rs 10 million worth of “bank guarantees” can be sold at a two percent profit on 10 separate occasions—or “traunches”—the seller would receive a 20 percent profit. Such a scheme is often referred to as a “roll program.”
To make their schemes more enticing, con artists often refer to the “guarantees” as being issued by the world’s “prime banks,” hence the term “prime bank guarantees.” Other official sounding terms are also used, such as “prime bank notes” and “prime bank debentures.” Legal documents associated with such schemes often require the victim to enter into non-disclosure and non-circumvention agreements, offer returns on investment in “a year and a day”, and claim to use forms required by the International Chamber of Commerce (ICC). In fact, the ICC has issued a warning to all potential investors that no such investments exist.
The purpose of these frauds is generally to encourage the victim to send money to a foreign bank, where it is eventually transferred to an off-shore account in the control of the con artist. From there, the victim’s money is used for the perpetrator’s personal expenses or is laundered in an effort to make it disappear.
While foreign banks use instruments called “bank guarantees” in the same manner that banks use letters of credit to insure payment for goods in international trade, such bank guarantees are never traded or sold on any kind of market.
Tips for Avoiding Prime Bank Note Fraud:
- Think before you invest in anything. Be wary of an investment in any scheme, referred to as a “roll program,” that offers unusually high yields by buying and selling anything issued by “prime banks.”
- As with any investment, perform due diligence. Independently verify the identity of the people involved, the veracity of the deal, and the existence of the security in which you plan to invest.
- Be wary of business deals that require non-disclosure or non-circumvention agreements that are designed to prevent you from independently verifying information about the investment.
“Ponzi’ Schemes
“Ponzi” schemes promise high financial returns or dividends not available through traditional investments. Instead of investing the funds of victims, however, the con artist pays “dividends” to initial investors using the funds of subsequent investors. The scheme generally falls apart when the operator flees with all of the proceeds or when a sufficient number of new investors cannot be found to allow the continued payment of “dividends.”
This type of fraud is named after its creator—Charles Ponzi of Boston, Massachusetts. In the early 1900s, Ponzi launched a scheme that guaranteed investors a 50 percent return on their investment in postal coupons. Although he was able to pay his initial backers, the scheme dissolved when he was unable to pay later investors.
Tips for Avoiding Ponzi Schemes:
- Be careful of any investment opportunity that makes exaggerated earnings claims.
- Exercise due diligence in selecting investments and the people with whom you invest—in other words, do your homework.
- Consult an unbiased third party—like an unconnected broker or licensed financial advisor—before investing.
Pyramid Schemes
As in Ponzi schemes, the money collected from newer victims of the fraud is paid to earlier victims to provide a veneer of legitimacy. In pyramid schemes, however, the victims themselves are induced to recruit further victims through the payment of recruitment commissions.
More specifically, pyramid schemes—also referred to as franchise fraud or chain referral schemes—are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses. At the heart of each pyramid scheme is typically a representation that new participants can recoup their original investments by inducing two or more prospects to make the same investment. Promoters fail to tell prospective participants that this is mathematically impossible for everyone to do, since some participants drop out, while others recoup their original investments and then drop out.
Tips for Avoiding Pyramid Schemes:
- Be wary of “opportunities” to invest your money in franchises or investments that require you to bring in subsequent investors to increase your profit or recoup your initial investment.
- Independently verify the legitimacy of any franchise or investment before you invest.
Market Manipulation or “Pump and Dump” Fraud
This scheme—commonly referred to as a “pump and dump”—creates artificial buying pressure for a targeted security, generally a low-trading volume issuer in the over-the-counter securities market largely controlled by the fraud perpetrators. This artificially increased trading volume has the effect of artificially increasing the price of the targeted security (i.e., the “pump”), which is rapidly sold off into the inflated market for the security by the fraud perpetrators (i.e., the “dump”); resulting in illicit gains to the perpetrators and losses to innocent third party investors. Typically, the increased trading volume is generated by inducing unwitting investors to purchase shares of the targeted security through false or deceptive sales practices and/or public information releases.
A modern variation on this scheme involves largely foreign-based computer criminals gaining unauthorized access to the online brokerage accounts of unsuspecting victims.These victim accounts are then utilized to engage in coordinated online purchases of the targeted security to affect the pump portion of a manipulation, while the fraud perpetrators sell their pre-existing holdings in the targeted security into the inflated market to complete the dump.
Tips for Avoiding Market Manipulation Fraud:
- Don’t believe the hype.
- Find out where the stock trades.
- Independently verify claims.
- Research the opportunity.
- Beware of high-pressure pitches.
- Always be skeptical.
General Tips to Avoid Fraud
- Always ask for and wait until you receive written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But, unfortunately, beware—not everything written down is true.
- Obtain a salesperson’s name, business identity, telephone number, street address, mailing address, and business license number before you transact business. Some con artists give out false names, telephone numbers, addresses, and business license numbers. Verify the accuracy of these items.
- Before you send money, ask yourself a simple question. “What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?”
- Don’t pay in advance for services. Pay services only after they are delivered.
- Be wary of companies that want to send a messenger to your home to pick up money, claiming it is part of their service to you. In reality, they are taking your money without leaving any trace of who they are or where they can be reached.
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