Top Tips For Avoiding Financial Fraud

Justin Freeman

Everyone is a potential target for financial fraudsters – young, old, rich, poor – whoever takes the bait is fair game to them. No one is immune, and if you think you are, then the scammers have an effective exploit: your overconfidence.

That’s why it’s important to stay informed on common financial frauds and to keep updated on the latest scams, online and offline. We’ve put together some practical security tips that should help to keep you (and your money) safe from harm.

financial fraud

1. Don’t Trust ‘Get Rich Quick’ Schemes

Is someone offering you an investment opportunity that seems too good to be true? Low risk with high returns – it’s a guaranteed profit, they assure you. But you’d better pay up quickly, because this opportunity won’t be around forever. They’re looking for confident early worms who want to make a buck and are willing to trust in their trade secrets. Are you in?

Frauds like these are often some form of Ponzi scheme, or High-yield Investment Program (HYIP). There are many variations on this formula, but basically they involve a fraudster advertising low risk yet lucrative returns to initial investors, who are then paid these promised ‘returns’ from money generated by a wave of newer investors. Eventually this creates layers of expectant investors sending their money up the pyramid, until the scammer gets their fill and leaves the whole scheme to collapse in on itself, with later investors receiving nothing.

You can often test a scammer by enquiring about their business, such as asking them to send written explanations of the investment or requesting that you run the proposal by a third party. The more they dodge and the vaguer they get, the surer you can be that you’re dealing with a scammer. Regardless, you shouldn’t ever be wiring money to strangers.

Remember: the infamous ‘Nigerian Prince’ email scam still works every year because people refuse to follow this simple rule.

2. Make Sure Websites Are Legitimate

Most people have the sense to avoid obviously dodgy websites, but sometimes there is a wolf in sheep’s clothing: clone websites.

Sometimes you’ll be sent a link to a familiar looking page, or a known big name that has a sheen of legitimacy. Everything looks in order – the logo, the banner, the formatting – even the page address is identical…or is it?

Closer scrutiny will reveal minor differences from the legitimate version, which you’d do better to catch before inputting your banking details. You’ve found a clone site, a well crafted duplicate looking to scam the unobservant. Although frankly, they can be very convincing, and many people could be forgiven for being caught if they aren’t checking the fine print in the address bar.

Links to these sham sites are typically sent through scam emails that request password updates or warn of your account security, part of a fraudulent practice commonly referred to as ‘phishing’. Actual bank or credit card companies would never ask you to send your personal information via email.

Many a trader has been tricked by dummy broker sites than con you out of your contact details or even your money. Make sure to check out lists of Trusted Broker sites, complete with direct links so you don’t have to risk clicking on clone sites.

forex fraud

3. Beware Of InstaScams

It’s often the older demographic that is perceived as vulnerable to online scams, but frankly the young and naive are just as susceptible, and social media scammers take full advantage of this with their Instagram Scams.

The finance side of Instagram features plenty of lavish influencers living large, showing off the riches they earned through savvy investments – sports cars, designer clothes, five star hotel holidays in Dubai. No doubt some of these accounts depict the legitimately lucrative, but others are just fake fronts for investment scams.

For those living vicariously through the luxury of others, an offer from a flashy finance influencer is hard to turn down. However, a significant percentage of these will be straight up scams, often using classic tactics to get the starry-eyed to send over their ‘investments’ for ‘quick returns’ that never show. Cryptocurrency such as Bitcoin can often factor into these frauds, as it’s a market on trend with the digitally native demographic.

Now, we’re not saying that you shouldn’t be interacting with other investors on social media. Just keep in mind the old adage ‘all that glitters is not gold’, that your average Instagrammers advice is not professional, and yes it bears repeating – don’t wire your money to complete strangers!

4. Avoid Using Lazy Passwords

These days, we’re tasked with juggling an increasing amount of logins, between our accounts for work, social media, subscription services… it’s a lot to remember, and it’s tempting to get lazy and repetitive with our password choices just out of sheer convenience. Of course, that’s exactly what hackers are counting on, and it doesn’t take much to imagine how serious the consequences could be, particularly when it involves financial information.

To make your passwords tougher to crack, make them unique to each account and try for at least eight characters featuring a mix of letters (upper and lower case), numbers and ‘special’ characters (think exclamation marks or asterisks). Try not to use obvious personal references that other people would know about, and set up two-step authentications for account access.

Of course, increasing the variety and complexity of your passwords makes them harder to keep track of – which is why extensions like LastPass can be so handy to have.

5. Install Security Software

Following basic safety precautions online, in combination with a modicum of financial sense, should help you steer clear of most scams and security risks. Still, no matter how confident you are, you’d be a fool not to invest in another layer of defence with antivirus software.

There are all manner of nasty viruses out there just looking to harvest your precious information. Serious amounts of money have been taken from bank accounts by Keyloggers – programmes which record keystrokes in order to crack passwords. If scammers fancy you a soft and lucrative target, you could be bled dry with Ransomware. As the name suggests, Ransomware holds your computer files hostage until you submit whatever the scammers want from you, typically extorting Bitcoin payments.

avoid financial fraud

Programmes such as these can be disguised as legitimate downloads – yet another reason not to open hyperlinks or attachments from sources you’re unsure about. Thankfully, these scams can be thwarted ahead of time by installing a protective antivirus that can detect and quarantine potentially malicious software.


Justin Freeman

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