Emily Andrews, Marketing Communications Specialist at RecordsFinder.
Financial fraud is the use of deception, misleading tactics, or outright theft to steal from another person or obtain sensitive data to steal from them or cause them financial harm. Financial fraud can occur from a variety of methods. Every year, millions of people are victimized in this manner.
Below, we discuss the 10 most common financial scams and what you can do to protect yourself.
10 Common Scams You Should Avoid
Here are the 10 most common financial scams to be aware of:
1.Credit and Debit Card Fraud
Credit or debit card fraud occurs when a person gets a hold of your credit or debit card information in order to make unauthorized purchases or cash advances. In some situations, the thief gets access to your account and takes it over so that you are not made aware of the fraudulent activity.
Identity theft occurs when a person obtains your confidential information like your date of birth and social security number and uses it to obtain credit, accounts, or other things of value in your name. In some situations, the criminal may work under your name, amassing tax debt, or even commit crimes. It can be incredibly difficult to disconnect yourself from unauthorized purchases and to reclaim your financial identity.
Phishing scams seek to obtain personal information such as your social security number, password, or bank account information. The scammer may pose as your bank and send you a message through text or email, asking you to “update” or “verify” your information. Scammers often use fake emails, phone numbers, and websites that appear to be legitimate in order to obtain access to accounts and personal information. However, the links they send are often infected with viruses that steal information from your device or take you to a website to store your personal information and then sell it to others.
In some scams, a scammer may contact you and ask for assistance cashing checks. They may promise to give you a portion of the money if you deposit them into your account. Once you deposit them and transfer funds to them, the check will usually bounce or show up as a forgery, leaving you with no deposit, plus insufficient fund fees. This scam can take on many forms. The scammer might give you checks because they claim they have hired you for a job, that you won a sweepstakes, or that you won a “free” vacation. Sometimes, they say they paid you too much and need to go through this process to “refund” you.
5. Virtual Threats
A particularly concerning type of financial fraud is a virtual threat in which a scammer gets sensitive information, such as suggestive photos or your company’s trade secrets by infecting your device and then threatening to release the information unless you pay an expensive ransom. In other situations, the scammer may lock you out of your own device or network until you pay the ransom.
6. Lottery Scams
The lottery scam is one of the oldest types of scams out there. In this scam, the fraudster claims you have won the lottery or another prize but that you have to pay a fee to collect it, money to ship it, or customs fees.
7. Fake Charities
In fake charity scams, the fraudster pretends to represent a real charity or sets up a fake organization and then solicits donations for the charity. This type of scam often follows natural disasters or other tragedies.
8. Mortgage Scams
Mortgage scams occur when a third party obtains a mortgage using your personal information. Other mortgage scams are perpetrated by lenders who sell mortgages or other loans by using deceptive practices or high-pressure sales techniques.
9. COVID-19 Scams
COVID-19 has inspired many additional scams, which may involve scammers:
- Pretending to be CDC or other professionals to request sensitive information
- Selling fake at-home coronavirus tests or treatments
- Charging for vaccinations
- Selling fake cures
- Creating fake vaccine verification apps to steal information
- Selling vaccine certificates or passports
10. Employment Scams
COVID-19 has also inspired employment scams with so many people being laid off and working from home. These scams may involve scammers posing as employers to obtain sensitive information, charge for training materials or certifications, or who send fake checks to “employees.”
How to Protect Yourself from Such Scams
The best way to protect yourself from a scam is to identify it as a scam before you are hooked. Here are some clues from the Texas Attorney General and Federal Trade Commission of a potential scam:
- They contact you
- They dangle something enticing, like money or a prize
- There is some type of problem, such as you owe money to the government, your grandchild is in jail, or there is a virus on your computer
- You are pressured to act immediately so you don’t have time to check on their claims
- They ask for your personal information, such as your date of birth, social security number, or bank account number
- You are instructed to pay first for something like shipping charges, custom fees, or other upfront fees
- They claim to be from an organization you trust, such as the IRS, Medicare, a charity, or the CDC
- You are told to wire money, send gift cards, or pay in some other untraditional way
Other ways that you can avoid potential scams include:
- Block calls, text messages and emails from scammers
- Check public records for anyone who contacts you
- Don’t give out personal information to someone who calls, texts, or emails you
- Don’t send money to someone you don’t know via wire transfer service or gift card
- Don’t click on links in emails or text messages
- Check on the caller’s claims by contacting the business or organization directly
What to Do When You’re a Victim of a Scam
If you are the victim of a scam, contact local authorities and report the events as a crime. Also, report it to the Federal Trade Commission. Take whatever steps you can to minimize the damage, such as stopping checks, closing your account, or putting a freeze on your credit.
Financial fraud results in billions of losses every year. But, by following the steps outlined above and taking immediate action if you become a victim of such a fraud, you can minimize the impact.
HOW MERCHANTS CAN IMPROVE THE ONLINE PAYMENTS EXPERIENCE
By Alan Irwin, Senior Director of Product at Global Payments UK
The dramatic increase in online shopping over the past 18 months has encouraged many businesses to invest in developing their omnichannel shopping experiences. The reasons vary – some are keen to capitalise on the trend of older shoppers migrating towards ecommerce and some are trying to make up for loss of sales in brick-and-mortar stores during the pandemic. It is also true that many businesses are shifting their models to sell direct to consumers to avoid high marketplace fees and are therefore building their ecommerce channels for the first time.
The checkout experience is arguably the most important and delicate part of the ecommerce transaction, as it can make the difference between a happy customer likely to return, and a shopping cart abandoned out of frustration and confusion. A survey from March 2020 suggested that 88% of online shopping orders were abandoned, i.e. not converted into a purchase. A seamless, customer-centric online payment experience is therefore critically important in ensuring completed transactions. But with so many payment providers available, what should businesses be looking for when trying to keep friction to a minimum?
Keep clicks to a minimum
Less touchscreen interaction equals less abandonment. Adapting the payment page to fit any device and supporting popular mobile digital wallets like Google Pay ensures a seamless, stress- and hassle-free checkout experience for the customer and keeps clicks to a minimum. Friction can present itself in the most minor features – for example, when the customer is navigating the payment form, the appropriate keypad should be shown to the customer when required. It’s much easier to enter a card number using the dial pad instead of switching between QWERTY keypad layouts.
Simplifying online forms with autofill and tokenisation also significantly reduces friction at checkout and shortens necessary time taken. Ensuring checkout forms are tagged correctly for “autofill” is a great way to offer customers a single-click to input the payment, shipping, and billing data that they have stored in their browser profile. Similarly offering a guest checkout option will help convert customers who are in a hurry or looking for a one-off purchase. This can also be achieved by offering to store the payment details (called ‘tokenisation’) for express repeat and one-click purchases.
Make it easy to understand
A tailored payments approach can increase both domestic and international global sales. By offering a checkout experience in the customer’s language, the option to pay in their currency of choice, and use their preferred method of payment (whether it’s PayPal, Alipay or card), businesses can build loyalty quickly and put customers at ease. It is equally important for merchants to ensure they always display simple direction and information about next steps to instil confidence and prevent customer drop-off. The customer should be informed of what is happening at every stage in the process, for example, whether they will proceed to SCA (Secure Customer Authentication) next or go straight through to completion.
In addition, validating forms in real-time means merchants can highlight potential errors to the customer early on, and payment providers should provide this functionality. This could be an invalid expiry date, an incorrect digit in the card number or incorrect CVV number based on card type. When issues are only flagged at the end of the process, this forces the customer to go back through the steps to figure out the error. Real-time signposting of problems removes this potential friction and reduces the potential for a declined transaction.
Ensure seamless security
Merchants should work with a payment partner who offers the right blend of security and compliance management without it coming at a cost to the end-to-end checkout experience for the user. Instilling trust and security in your checkout flow while utilising the right solutions to drive seamless authentication flows will increase customer confidence and help prevent drop-off.
The greatest level of security and control comes from either utilising hosted payment fields that the
merchant can natively integrate into their checkout flow, or a hosted payment page where they can
manage the look and feel. Showcasing your brand on the checkout page with trust signals and logos also adds to building trust with the customer.
Staying ahead of regulations is also important. Secure Customer Authentication (SCA) will soon be mandatory in the UK for all eligible digital transactions, and this doesn’t have to be a friction-full process. Tools like Transaction Risk Analysis (TRA) and Exemption Optimisation Service (EOS) can quickly score transactions and drive exemptions where there is the right blend of transaction risk.
The devil is in the details
These three rules for successful ecommerce checkout experiences may seem straightforward, but it is important to apply them at a micro level. It can take only one minor point of friction to cause a customer to abandon their cart, and this will inevitably be replicated across other similar customers. It is critical to identify friction points early on and anticipate customer needs throughout the process. Discussing these points and any opportunities to improve customer checkout experience with your ecommerce team and payment provider is an important first step towards ensuring your entire shopping experience remains competitively seamless and loyalty is won. It may be that your payment provider cannot address them, in which case it could be time to move on in order to stay competitive.
NAVIGATING FINANCIAL SERVICES IN 2021: LOW-CODE TO THE RESCUE
Nick Ford, Chief Technology Evangelist, Mendix
Financial services are the poster child of great digital transformation: today, Britons can pay from their watches, check their balance directly from their phone at any time and even automate trading. This level of innovation isn’t only about customers: traders are able to operate faster than ever before thanks to better predictive analysis and forecasting tools, and finance teams are able to collaborate from anywhere in the world.
While we embrace all this innovation, it’s easy to forget that the reality of the sector is incredibly complex. The radical changes induced by COVID-19 have highlighted how challenging maintaining innovation today really is, while putting more pressure on IT teams to accelerate the digital transformation of the sector even further.
On top of this, the sector is one of the most affected by Brexit. Mendix’s Navigating the UK Landscape research found that businesses in the financial services sector have serious concerns about the impact of Brexit on their industry. Many believe that Brexit has damaged the reputation of the UK as a centre of finance (67%) – as well as creating functional challenges for businesses in the country.
Many financial services organisations are turning to technology, and specifically low-code, to deal with these challenges. This piece will look at how firms in the sector can use low-code to navigate the new world.
A sea of challenges
Financial services are complex: there are thousands of products to choose from, from savings to investment and mortgages. These services are then managed by lots of different companies, creating an additional level of complexity: banks, fintechs, brokers, wealth management specialists, government bodies… the list goes on. To add yet another layer, there’s a network of regulations, which change over time, forcing IT leaders to constantly keep on top of the latest evolution in the sector. Knowing these is only the first step: every time new laws are implemented, the sector needs to adjust to them, and that can mean anything from revising security protocols to radically changing the way information is processed, transmitted or audited.
This may already look complicated, but the real complexity starts underneath, in the realms of processes that the IT manages to keep the company operating as normal. It would be fair to say that the mission of financial IT leaders is often underrated: they deal with antiquated systems dating back decades, inadequate data management processes and minute security and compliance considerations every day, simply to keep the business afloat. Add to this the need to get all staff to work remotely during the lockdown, and the already time-poor IT leaders are now completely swamped.
Brexit also makes things difficult for financial services organisations. Two thirds anticipate costly and complicated processes for crossborder payments and investments, while 59% believe it will be harder to attract foreign investments. Ultimately, 61% admit they will no longer be able to support some of their customers because of the transition.
Tech as a raft
While the sector is mired down with complex processes and inadequate tools, it also needs to deal with a major challenge: fierce competition for tech-savvy customers. Now, all banks, investment firms and wealth management companies are investing in tech to help them cope with new customer demands for easier access to their capital and increased transparency. Two thirds have deployed digital projects to make the business more flexible as a result of Brexit, with data management (62%) and digital processes (62%) particular focal points.
And this is not just about pleasing digitally minded customers: it’s also about improving productivity and operational efficiency, harnessing data, and solving compliance challenges. This balancing act between priorities is gathering pace and spreading across the business: today, IT teams must deliver innovation that’s fast, reliable and secure, and that supports many divisions — all at once. It’s a big challenge, but it’s one that IT leaders are willing to tackle head on: two thirds of IT leaders believe the value of digital transformation initiatives outweighs their inherent risk. Yet, IT leaders know that rushing would be a mistake: although IT teams face high demand for their support, most would not prioritise speed over caution, even if they could innovate faster. This measured pace ensures that financial organisations are delivering the right solutions at the right time, reducing the risk of service disruption and security challenges.
Low-code to the rescue
To manage all these priorities, the IT team needs to look beyond its own team to create revenue-generating services that truly answer the clients’ needs – and it needs to empower all developers with the right tools to do so. This improves collaboration between IT and customer-facing staff to design services that suit the needs of the customer base, while reducing the pressure of an already-stretched IT team. Enter low-code: most leaders (58%) say that low-code has enabled the development of new applications to support their companies post-Brexit.
One example of this is a Financial Institution, which perceived its digital user experience lacking and engaged low-code to install a new user experience for its portal, consumer and wholesale digital services. It was able to do this in just eight months, providing numerous benefits to stakeholders.
Low-code software development provides a simple solution to address these constraints and challenges: based on a visual approach for building applications using drag-and-drop components, it enables non-technical staff to participate in creating business applications, even if they have little to no coding experience. Working separately or in close collaboration, professional developers and business-side “citizen developers” can create, iterate, and release applications in a fraction of the time it takes with traditional methods, all under the watchful governance of IT to ensure their applications comply with enterprise standards and architecture.
A low-code approach allows for flexible, iterative app development for many use cases in the financial services sector, including legacy application upgrades to comply with new regulations, apps supporting smart banking or portfolio management, and mortgage application management. With low-code, the financial services industry has the right tools to untangle its complex processes, simplify its evolution and focus on its core mission: keeping the economy thriving.
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