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Improving Awareness of Financial Fraud Among Indian Consumers
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Today, Indian’s banking sector is celebrating the fact that the total volume of bank fraud cases in the country has decreased from $17.42bn down to $7.62bn. That number, however, must be taken with a grain of salt as financial analysts suggest that most Indian consumers are too embarrassed to report that they have been victims …
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Today, Indian’s banking sector is celebrating the fact that the total volume of bank fraud cases in the country has decreased from $17.42bn down to $7.62bn. That number, however, must be taken with a grain of salt as financial analysts suggest that most Indian consumers are too embarrassed to report that they have been victims of fraud. This directly translates to awareness of financial fraud since not reporting such cases can be taken as a sign of financial illiteracy. Unless Indian consumers step up to testify, concrete actions cannot be taken to mitigate financial fraud.
However, although the overall monetary volume of fraud cases has decreased, in the financial year 2022, the Reserve Bank of India has reported 9,103 fraud cases in the banking sector so far. This number is backed by a survey conducted in 2018, which revealed that 25% of respondents aged 27 to 37 had experienced fraudulent activities in the banking sector that year. The majority of these cases were attributed to fraudulent ATM and bank transactions; these were estimated to number around 12,000 cases in the financial year 2016, a steep 36% increase from the financial year 2013.
The more pressing concern now is that the targets of these scams are usually retired senior citizens who are most likely to have substantial savings. Other targets include emotionally vulnerable citizens, people with cognitive impairment, and widows. Therefore, the misuse of trust can quickly become a major contributor to financial fraud.
Common means of financial fraud in India
Scamsters may show up at any time in any disguise. However, all people need to know is how to instantly recognise and avoid them. Here are some steps on how to raise awareness of financial fraud, which will help enterprises as well as their customers guard against banking fraud:
- Assess risk of fraud
The first step towards reducing the risk of fraud is, of course, conducting an assessment. Whether conducted by an analyst or independently, assessing risks will help locate vulnerabilities that could be exploited by fraudsters.
Working on an outdated personal computer, or having a contact number that is publicly accessible are potential entry points for hackers and phishing scammers looking to gain access to private banking information. Securing personal devices may require some investment, but it is a definite step closer to achieving financial security.
- Educate employees
Knowledge is essential, regardless of the size of the financial institution involved. Employees working in an organisation need to understand the risks of fraud and the many ways it can occur. Conducting training sessions, maintaining up-to-date software, and employing an efficient cybersecurity team that can provide layers of digital protection are essential for companies in today’s world. Employees must be continuously trained every 6 to 12 months, which will ensure the idea of fraud detection and prevention is kept fresh in their minds.
- Implementing cybersecurity practices
Nowadays, many people use the cloud to access their banking information. This presents fresh challenges for financial institutions. Operating systems must be set up to ensure that data is not only protected from attackers but that the people accessing the data are properly identifying themselves. Many institutions use a combination of improved cybersecurity and traditional methods to contact a client in the event of unusual activity on their account. The increasing adoption of the Internet of Things (IoT) has also paved the way for more focus on cybersecurity measures.
- Enforcement by Office Of Foreign Assets
When new customers – whether individuals or companies – open accounts, they must always go through an Office Of Foreign Assets (OFAC) exam to verify the validity. This should also be combined with OFAC reviews of the entire database for existing names and addresses.
- Providing customer education
Financial institutions can use robust software, conduct audits, and use cutting-edge cybersecurity tools to reduce fraud and protect their customers. However, their customers must also be careful on their part, or they could become victims of fraud. The activities of consumers could inadvertently endanger financial institutions, so they should be given tips to avoid falling prey to financial fraud. Companies can educate clients by publishing guides on their websites, sending newsletters to clients, or publishing brochures for distribution.
Working to stop financial fraud
If a person suspects that they or someone else has fallen prey to fraudulent banking activities, they can visit the Digital India website to receive support on what actions to take. The Digital India website was created by the Indian government to support its citizens and transform the country into a digitally empowered nation.
This is a partnered post.
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