Preferred Language

Preferred Language

Stay Vigilant. Stay Protected Against Financial Frauds


Author – Ganesh Mohan, Group Head of Strategy, Bajaj Finserv


April 20, 2021

Ever since the pandemic, financial frauds have been on a steady rise, endangering the security of digital native and digital nascent users. The past year was rife with incidences of cyber frauds, ATM frauds, debit /credit card frauds, predatory lending app frauds, insurance frauds et al. Today, financial fraud has become a trillion-dollar industry and with the advent of newer technology and our growing adoption or rather dependencies on digital payments, the industry looks to grow further unless we take precautionary measures during our digital interaction journeys, because fraudsters are ‘re-imagining’ ways to dupe unassuming users!

Financial frauds have always been around!

Frauds and scams have been around ever since humans had assets worth thieving, but the digital revolution in financial services led to the industrialization of financial frauds. As huge volumes of consumers are flocking to online channels for everything including work, entertainment, shopping and banking, frauds have become more evolved and relentless, necessitating advanced levels of protection measures to combat them. At the same time, it becomes increasingly important for us to be extra cautious in our financial transactions. Most of us may not even be aware of any spyware that is installed on our computers and maybe tracking our keystrokes or reading our messages. 

While demonetization opened the floodgates to a Digital Atmanirbhar Bharat, online frauds boomed into a thriving industry! There are now several phishing scams which use links in emails to direct customers to fake/look-alike websites of banks and other financial institutions.

Many phishing scams now-a-days involve ‘social engineering’, in which the fraudsters posing as company officials call up victims seeking their personal details such as PAN/Aadhar Nos., Debit & Credit card PIN, CVV, OTP etc., all in the garb of updating their e-KYC or increasing their credit limit.

SMS texts purporting that your EMI card has been suspended and requires e-KYC to be redone is a classic example. There are several other tell-tale signs of Fake Ads / SMS / calls around guaranteed loans with zero eligibility criteria or credit checks / time-bound / limited period loan offers, and the list goes on. Social media apps have also become a playground of unscrupulous fraudsters who are out to rope you in with fake loan ads and loan frauds.

Warning Signs of Loan Scams

Limited period offer: Personal loan scams involve false promises and offers that appear too tempting. If you come across a great offer, discounted interest rates or other benefits that are available only for a limited period and the lender presses you to apply within a specific time period, in most cases, this is a loan scam. In cases where you are threatened with the offer expiring or having limited applications that are filling fast, you should be extra cautious of who you are dealing with. This is a common technique used in personal loan scams in India.

No checking of credit score: Every authentic and established lending institution will always check your credit history before sanctioning your loan process. They make it a point to thoroughly scrutinize your income tax returns, credit score, credit history, and previous loan payments. Hence, it’s often seen that consumers with low credit score are more vulnerable to these scams.

Direct contact by the lender: When the lender contacts you directly and tries to imply that you are being provided special attention and care as a customer, you should not get carried away and believe what he or she says. This is because it is highly unlikely that you would get unsolicited calls from lenders without having applied for a loan. You only get a call once you have applied for a loan and the lender is conducting a pre-screening before taking up your application. An unsolicited call would mostly be a personal loan scammer that you should be cautious of.

Insurance Frauds

While financial frauds are associated mainly with urban areas, rural & semi-urban India take the lead when it comes to insurance frauds mainly because insurers do not have proper infrastructure to inspect / perform due diligence. There are various fraud rings in the life insurance space where organised fraudsters identify people who are terminally ill, buy insurance on their behalf and share part of the claim pay-out with the family members. Often there is a nexus between fraudsters, doctors, lawyers and village-level administrators in these cases.

Motor Insurance Frauds

Frauds associated with accident claims pose a significant problem for general insurers. In many cases, those who died of natural causes were filed as road accident victims causing enormous losses to insurers. While there are various fraud rings working on planning / inventing losses for a claim pay-out, many times frauds are not committed intentionally, but they still affect both, the policyholders as well as the insurance companies. For example:

- Quoting inflated claims or including old damages as part of new claims mainly due to the common belief that insurance companies never pay the full amount of the claim

- Using someone else’s address to register and insure cars because of lower insurance rates in that area

- Shops / garages overstating the accident damage to make money from unnecessary repairs or opting for parts replacement instead of simple repairs

Health Insurance Frauds

Health insurance industry also faces huge losses because of increasing fraud claims. The following are some of the commonly committed frauds by customers knowingly or unknowingly:

- Missing out on details of any pre-existing disease or mistakenly entering an incorrect date of birth while filling out the proposal form

- Manipulating pre-policy health check-up findings

- Submitting duplicate and inflated bills

Remember, a financial fraud can happen only when you provide an opportunity to the scamsters. We need to be more aware and alert about our surroundings be it online or offline.

So, next time, think before sharing any sensitive data with someone via online, social media or any other applications installed on your phone, because what you share is permanently ‘shared’ in the digital world!

The article was originally published in Business World



Never miss a thing. Get latest updates straight to your inbox.

Subscribe Now