Banking Frauds - How to avoid getting trapped?

During the COVID-19-induced lockdowns, digital payment options have greatly increased in popularity. Digital payments are helpful to customers since they make financial transactions simpler.

The development of the country's economy is significantly influenced by banks in the current economic system. Banks are increasingly involved in a wide range of activities and introducing new services and programs that widen the door for financial inclusion. Although the banking sector is growing, it nevertheless faces some operational challenges, such as fraud.

But it also provided con artists additional chances to find loopholes and trick customers in new ways. In order to inform banking customers about fraud involving digital payments and to lay out the precautions they should take before engaging in financial transactions, the Reserve Bank of India has published a brochure. How are phishing schemes carried out? Phishing websites are created by fraudsters to look like legitimate websites, such as those for banks, e-commerce sites, search engines, and other services. In addition to other platforms, scammers distribute links to these websites via SMS, social media, email, and instant messaging.

Many people click on links without first verifying the Uniform Resource Locator, entering security information such a Personal Identification Number (PIN), One-Time Password (OTP), password, and other information (URL). Then, scammers collect and make use of these information.

Online marketplace scams

Scammers assume buyer personas on online marketplaces and express a desire to purchase the goods from the vendor (s). Several con artists pose as defence personnel stationed in distant regions in an effort to gain people's trust.

Instead of paying the seller, they use the "request money" option in the Unified Payments Interface (UPI) app and insist that they confirm the request by entering the UPI PIN. Money is transferred to the fraudster's account each time the seller inputs the PIN.

frauds committed via shady or unverified mobile apps

The RBI asserts that scammers disseminate specific software URLs via SMS, email, social media, instant messenger, etc. that are falsely represented as already-existing apps from reliable app shops. The consumer is duped by scammers into clicking on these links, which leads to the download of unknown or unverified apps onto the customer's mobile device, laptop, desktop, etc.

The con artist has complete access over the customer's device once the infected app has been downloaded. These include private information saved on the smartphone as well as messages or OTPs that were received before or after installing such apps.

ATM card fraud.

Skimming devices are installed in ATMs by criminals who want to steal information from customers' cards. Occasionally, con artists acting as adjacent customers can access a user's PIN when they enter it into an ATM. Then, using this data, a replica card is created, and money is taken from the customer's account.

How is vizing implemented?

Imposters may pretend to be bankers, business executives, insurance agents, government officials, or other individuals when calling or approaching clients face-to-face, over the phone, or over social media. Imposters disclose a few consumer facts to win trust, like the customer's name or birthdate. Imposters may pressure or trick customers into disclosing private information, such as passwords, one-time passwords (OTPs), PINs, and card verification values (CVVs), by invoking a sense of urgency or an emergency, including the need to stop an unauthorised transaction, the need to pay a fee to avoid a fine, the need to receive an alluring reward or discount, among other things. These credentials are then exploited to defraud customers.

Customers who have been duped into downloading a screen-sharing app are urged by RBI to use the method. A customer's smartphone or laptop can be monitored or taken over by fraudsters using such an app, giving them access to their financial data.

Fraudsters can perform unlawful fund transfers or payments via the customer's online banking or payment apps.

Fraud with a QR code

RBI claims that scammers routinely call clients and use a variety of gimmicks to get them to scan Quick Response (QR) codes with the use of the apps on their phones. By scanning such QR codes, customers may unintentionally give fraudsters permission to withdraw money from their accounts.

Scammers can easily access this information to trick consumers because so many people use social media and constantly update their profiles.

Fraudsters get in touch with the friends of the users and request cash for things like payments and urgent medical costs. Fraudsters can also approach users and gain their trust over time by providing them with bogus information. When users share sensitive or personal information, scammers can exploit that information to threaten or blackmail people into paying money.

How to avoid these types of scams

1. Verify details of buyer/seller before proceeding to payment.

2. Any individual showing urgency or not waiting for a reasonable amount of time is likely to be a scammer.

3. You should never scan a QR code, share an OTP, or visit a link given by anyone on the internet.

4. Your One Time Password (OTP), UPI pin, and other secret information should not be shared on WhatsApp. Never provide banking information if anyone asks you to and always contact your bank. There is a possibility of fraud here.

5. It is recommended that digital escrow platforms be used for payment. When making an online payment with Escrow, you do not share your financial information with anyone. There is a platform for escrow called Vouch.

How does digital escrow work?

In digital escrow, a third-party account holds the money deposited by the buyer until the seller fulfills the terms of the contract. The escrow company supervises the transacting parties.

What is the role of Digital Escrow in preventing online fraud in India?

Digital escrow services are offered by many companies in India. Among the most trusted is Vouch.

Vouch’s Digital Escrow service is a transparent way for buyers and sellers to build trust and secure a clean transfer of product and payment. Sellers can feel assured that they will be fairly compensated promptly, and buyers will feel confident that their order will be delivered as expected and on schedule. Vouch Digital Escrow keeps you updated and informed at every step of the transaction process till the end. Vouch’s professionals are always available to assist you with all queries that you may have during the entire transaction process.

There is no scope for deceit or fraud since the payments, shipping, delivery, and execution are carried out under the honest and watchful eyes of the Vouch’s professionals. With Vouch, any business transaction becomes transparent, uncomplicated, and hassle-free. If you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply refuse and ask him/her to proceed with the transaction through Vouch.

Check back here for more Blogs on how to avoid frauds

Safety is not just about protecting your credit, debit card number, and UPI accounts. It's about having control of your money till you've received the product or service you bought online!

Note: This is a good-faith initiative to educate the world about avoiding frauds like these and how to act when you're becoming a victim of such a situation.

Do you have a fraud you would like to report? Please write to us at letstalk@iamvouched.com