4 Examples of Cyber Frauds & Ways to Avoid Them

Technology is growing at a very rapid pace; more people are connecting to the internet each passing day. More than 65% of the global population, more than 5 billion individuals, use the Internet. Financial institutions use technology and the Internet to make e-commerce and financial transactions easier. With ease, issues of security and financial fraud come into play.

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In recent times, a surge in cyber frauds has been recorded. All such frauds exploit the human psychology of greediness, lack of awareness, and fear of losing something. Cyber frauds are evolving, so you must keep updated to avoid getting robbed. Highlighting the concept with examples of cyber frauds will ease the efforts to counter them.

According to Cybercrime Magazine, cybercrimes will cost 10.6 trillion USD annually by 2025.

Four Common Examples of Cyber Frauds

Here are some of the most common examples of cyber frauds you need to know and how to avoid them:

1. The Trap of Ponzi Schemes

Ponzi schemes are among the best examples of cyber frauds, practised in both virtual and real domains. Ponzi schemes are designed to fool people in the later stages of its launch. Ponzi schemes promise high returns for investments to lure in innocent targets. These types of frauds are dependent on solid word of mouth.  Initially, they deliver what they promise; typically, for about a year, you will get the promised amount as profit. In the later stage of its launch, when fraudsters achieve the target amount of money from people, they will vanish with the investments from new investors without leaving any trace. Damage is usually very high in this type of fraud.

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How to avoid Ponzi Schemes?

1. 1. First, check the return on investments (ROI). All Ponzi schemes offer very high ROI, typically 100% or more per month. This creates a solid and positive word of mouth to achieve their target early. People easily fall into the trap of high returns.
2. Ask for regulatory documentation before investing. No Ponzi scheme will be able to produce all the requisite documentation. They operate in grey zones, so it is difficult for them to arrange all those documents.
3. Ask for their physical offices; in some cases, they do have physical offices, but not in most cases. So, visiting their offices before investing in anything should be a must-have practice.
4. Never invest in platforms operating just through a URL or an app.
5. If you find something fishy and are still eager to invest, check how long they have been operating; if it is more than six months, never go for investment.

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2. Frauds in Online Classified Ads

This is a commonly practised form of cyber fraud, but it is relatively new. It developed after the boom of e-commerce platforms. Here, fraudsters make a fake website with fake itineraries. They offer cheaper prices to lure their targets. In this case, damage is not very high, usually under 100 USD. Fraudsters expect to place orders seeing discounts and lower prices, but the placed order will never be delivered to the customer. They also have no physical presence, so you cannot make a complaint to recoup your lost money.

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How do You Secure Yourself from Classified Ad Fraud?

1. Research the seller’s reviews on their website and social media platforms.
2. Contact them via email or the number on their website to check whether their contacts are active.
3. Try to place orders from the brands’ official websites and avoid 3rd party websites.

3. Phishing through Banking

This is also a relatively new type of fraud. In this type, fraudsters usually target a lack of awareness and fear of a target individual. With technological advancements, they can send SMS using your bank’s name. An SMS pops in the name of your bank reporting an activity making you fearful, and then you will be asked for your account details (usually number, password, or OTP). This will give them access to your account to sweep it. In some cases, fraudsters force you to log in to your bank account via a generated link, giving them access.

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How to Avoid Phishing Scam?

1. Everybody has to be aware of these frauds; moreover, one has to know the rules and regulations of respective banks.
2. It is a kind of fraud where the target individual is unwittingly involved in permitting them. Remember, there is no way fraudsters can take away your money remotely; they always need your support.
3. Lastly, banks and other financial institutions only ask for account details and demand OTP after initiating a transaction from your side.

4. Credit Card Frauds

There are two subcategories of this type, but both are related to the data of your credit/debit card. In the first subcategory, a credit card is cloned by taking your card details from an ATM and then used elsewhere to draw money or make a payment. This category was practiced extensively in the recent past. Currently, the second subcategory is in practice, where card details are acquired from call centres or insecure small retailers and used to sweep away your account through a 2D payment gateway. Your card details can also be used for online purchases or paying bills on paid websites.

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How to Avoid Credit Card Frauds?

1. For credit card fraud, fraudsters require your card details, especially CVV; they cannot make transactions without knowing CVV. So always keep your card safe places and don’t share details with anyone except your close ones.
2. If you are shopping online, try to keep a separate card for online shopping. Only recharge your shopping account when required. Otherwise, keep it empty or keep some money.
3. Don’t use your card on unauthorized, unknown, or suspicious websites or small retailers.
4. When using your ATM to draw cash, always check its condition. If it is damaged or the keypad is hard to press, never use that ATM. Furthermore, check for any extra equipment that can be used for skimming.

Bottom Line

With the increasing involvement of technology in the financial ecosystem, cyber frauds in the cyber domain are also increasing. The earlier addressed examples of cyber frauds are the most common and in-action cyber frauds. These frauds quickly change shapes, but the core always remains the same. These cyber frauds can be easily detected and avoided with knowledge and awareness.