Types of Banking Frauds - How to Prevent Them

16 January 2024
5 min read
Types of Banking Frauds - How to Prevent Them
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How often have you received an SMS saying you have just won a 1 crore lottery? Or that your bank account needs some urgent KYC verification?

Often right? This is nothing but a Banking Fraud!

Banking fraud and scams in India have been prevalent for years now. Despite numerous efforts from the government and regulating authorities, the number of banking frauds hasn’t been reduced yet.

These days, scammers are making the most of the web (especially the dark web), malware, fake profiles, etc., to illegally hack into a person’s bank account and rob their hard-earned money in seconds.

This blog has been drafted to highlight the various types of frauds in banks in India, along with the ways you can prevent them.

Top Bank Frauds In India

Here is a list of some of the highly prevailing bank scams in India-

S.No.

Bank Account Scams 

1.

Automatic Withdrawal Scams

2.

Phishing Scams

3.

Charity Scams

4.

Overpayment Scams

5.

Cheque-Cashing Scams

6.

Government Masquerader Scams

Now, let’s discuss in detail some of the common banking frauds, including the internet banking frauds as well-

  •  Scam 1 - Automatic Withdrawal Scams

Automatic withdrawal scams are among the most common bank frauds in India. In such a scam, you might receive either a call, SMS, postcard, etc., stating you have won a prize or an exciting offer. Next, the scammer will demand the bank details and ask for the numbers mentioned below your cheque.

The moment the scammer avails of the banking details, they put it in a demand draft and file with the bank. Once the bank receives the same, it will transfer the sum of money from your account to the scammer.

  • Scam 2 - Phishing Scams

Phishing scams are mostly done via mediums such as SMS and e-mail directed to a link. Through such fraud, scammers send clickbait messages that resemble official bank messages. Such links may ask you to fill in personal information, including your mobile number, account number, OTP, etc.

After gathering your personal information, the scamster will hack into your account and steal your money in no time.

  • Scam 3 - Charity Scams

Charity scams are emotional ways to influence naive people to donate their money. Through such a scam, fraudulents take the benefit of people’s empathy by impersonating charitable organisations.

People often fall for such scams as they directly trigger emotions. Misled people end up donating to such fake charities and lose their money to scammers.

  • Scam 4 - Overpayment Scams

Such scams are often targeted towards sellers operating their business online.

Scammers pose as buyers and send off a cheque (a fake one) as their payment for a price that is higher than it should be. Next, they will demand a refund of the difference via online mode.

But, since the original payment was fake, now, while repaying, the seller ends up losing the refund money and the price of the product sold.

  • Scam 5 - Cheque-Cashing Scams

This is another emotion-triggering scam that crooks often undertake.

Here’s an example to understand this - Mr John was just coming out from the bank and was suddenly approached by a person asking if he could help him cash a cheque as he doesn’t have an account in that bank. John decides to help him as he can deposit the cheque and withdraw cash from the bank. Post the clearing process, the cheque didn’t clear, and the funds were held against John’s account.

This is one of the most common bank fraud cases in India that has trapped many victims.

  • Scam 6 - Government Masquerader Scams

Frauds in banking sector by impersonating a government official has been quite common. Herein, a scammer calls up, claiming you’ve won a lottery that requires some fees or tax payment to process the prize money further.

On denial, the scammer threatens to file a complaint on non-payment of tax/fees. People often fall for such fake claims and end up paying the sum.

This fraud has happened to numerous people across the country due to less awareness.

How to Prevent Bank Frauds in India 

Preventing banking fraud is crucial. Not only does it lead to loss of money, but a sense of distrust in banking operations, too.

Here is how to spot and report bank frauds in India-

Ways to Prevent Bank Frauds in India 

Details

Don’t Share Your Personal Information

Never share your account numbers, passwords, social security numbers, credit card numbers or any unidentified OTPs with anyone unless you trust him/her

File a Complaint

Never fail/delay to file a bank fraud complaint if you fall prey to a scam

Never Cash a Cheque for Other People

You should never cash a cheque for an unknown person

Be Attentive

Read and examine the received messages, e-mails, chats properly before clicking on any link or calling any unknown number claiming you have won a cash prize

Double-check 

You should always verify unsolicited cheques with your bank before cashing

Never Pay to Redeem Prizes

Never pay any sum to redeem any lottery or prize

Do Not Engage over the Phone

Never engage scammers on the call, even if they cite themselves as government officials

Be Cautious on the Internet

Before clicking on any emails or links, inspect the URL, brand name, spelling, etc., as it may be a malware

Be Careful Over the Call

You should never share sensitive details over the phone unless you trust the person. Also, check your surroundings before you share any information

Closing Remarks

Offline and Internet banking fraud have been persisting in India for many decades. Despite several educational initiatives from the government and many banks, people often fall prey to bank fraud.

Here, we have covered the common bank scams in India, but there are many more that one should be careful about.

On a closing note, we would recommend you stay attentive, never share your bank or personal details with a third party, inspect the messages you receive thoroughly, and avoid engaging in any acts that seem malicious.

You May Also Be Interested to Know

1.

How to Secure Your Account from UPI Frauds

2.

How to Protect Your Demat Account from Fraud

3.

How to Avoid Personal Loan Scams and Frauds

4.

Insurance Frauds in India - How to Avoid It?

5.

Ways to Avoid Cyber Threats and Be Safe
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