Digital Finance Scams: How To Safeguard Your Money With Expert Help. Top Tips To Keep In Mind

From strong passwords and 2FA to relying on VPNs, there are several easy tips to follow to stay safe from digital scams.

Consulting a financial advisor can be incredibly valuable for ensuring secure financial planning, especially in the face of technology scams.

Source : Mohamed Hassan/Pixabay

By Priti Goel

A financial technology (fintech) scam involves fraudulent activities that exploit technology to deceive individuals or businesses for financial gains. Some common types with real-world examples are:

• Social Engineering – Victims are scammed to reveal sensitive information such as passwords, or account details, often using phishing emails or fake websites. 

A Shark Tank television judge was tricked in a nearly $400,000 social engineering scam in 2020. A cybercriminal impersonated her assistant and sent an email to the bookkeeper requesting a renewal payment related to real estate investments. He used an email address similar to the legitimate one. The fraud was only discovered after the bookkeeper sent an email to the assistant’s correct address asking about the transaction.

• Identity Theft – Criminals steal personal information to access financial services, open new accounts or make unauthorised transactions. 

A Head of Communication of UK’s largest youth publisher faced a six-month struggle to reclaim her identity after it was stolen by criminals. She discovered the theft when she was refused a mortgage due to a payday loan taken out in her name without her knowledge. Additionally, a bank account had been opened by fraudsters using her identity.

• Account Takeover – Fraudsters obtain login credentials through phishing or social engineering and gain unauthorised access to financial accounts. 

In Google Docs Phishing Scam (2017), attackers sent emails that appeared to be from known contacts, inviting users to view a shared Google Docs document. The link led to a fake Google login page, where users unknowingly entered their credentials, allowing attackers to take over their accounts. 

• Payment Fraud – This involves using stolen credit card information or hijacked online payment accounts to complete unauthorised transactions. 

Between 2013 and 2015, a certain man managed to defraud Google and Facebook of over $120 million. Posing as an employee of a legitimate supplier, he sent fake invoices to the tech giants. The companies, believing the invoices were genuine, paid them without realising they were being scammed.

• Synthetic Identity Fraud – Scammers create fake identities by combining real and fabricated information to open accounts and commit fraud. 

Two men from Florida created ~700 synthetic identities using stolen Social Security numbers and fake personal details. Used these identities to defraud the Paycheck Protection Program (PPP) during the Covid-19 pandemic, illegally obtaining over $3 million. 

• Tech Support Scams – Fraudsters pose as tech support representatives, convincing victims that their financial accounts are compromised and gaining control over their computers and finances. 

A woman received a call from someone claiming to be from Microsoft and that her computer was infected with a virus, and they needed to fix it immediately. She was asked to download a remote access tool, allowing them to control her computer. They ran fake diagnostic tests, showing her several “errors” and “viruses” on her system. To fix this, they demanded a payment of $300. Unfortunately, she paid, only to realise later that she had been scammed.

• Investment Scams – Fraudulent actors offer bogus investment opportunities, often in emerging financial technologies like cryptocurrencies, promising high returns. 

A former NASDAQ chairman defrauded thousands of investors out of billions of dollars over at least 17 years. He orchestrated the largest Ponzi scheme in history and promised high returns with little risk, but in reality, he was using new investor money to pay returns to earlier investors. When the scheme collapsed, it led to losses estimated at $65 billion.

Here are some tips to help you stay safe from digital finance scams:

• Use Strong Passwords and Multifactor Authentication: Create unique, strong passwords for your financial accounts and enable multifactor authentication to add an extra layer of security.
• Be Cautious with Emails and Links: Avoid clicking on links or opening attachments from unknown sources. Scammers often use phishing emails to steal your information.
• Monitor Your Accounts Regularly: Keep an eye on your bank and online accounts for any unauthorised transactions. Report any suspicious activity immediately.
• Use a VPN: A Virtual Private Network (VPN) can mask your IP address, making it harder for scammers to track your online activities.
• Install Security Software: Ensure your devices have reputable antivirus and anti-malware software installed to protect against malicious attacks.
• Verify Sources: If you receive a call or message from someone claiming to be your bank or another institution, hang up and contact the institution directly using a verified number.
• Stay Informed: Keep up to date with the latest scams and cyber security threats. Knowledge is the best defence.

Consulting a financial advisor can be incredibly valuable for ensuring secure financial planning, especially in the face of technology scams. Financial advisors are:

• Increasingly knowledgeable about cyber security threats, can recommend tools and strategies to safeguard your personal information and assets.
• Trained to recognise and prevent scams, can educate you about common scam techniques and psychological strategies.
• Follow regulations that require them to monitor for suspicious activities in your accounts; including setting up emergency contacts and temporarily freezing accounts, if fraud is suspected.
• Provide tailored advice based on specific financial situations and goals, ensuring the financial plan is robust and secure against potential threats.
• Can provide you significant peace of mind, knowing that a professional is looking out for your financial well-being.

(The author is the Founder & CEO of Prisha Wealth Management Private Limited)

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