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Business News/ Money / Personal Finance/  6 ways to protect yourself from cyber fraud threats

6 ways to protect yourself from cyber fraud threats

The digital age has made financial transactions convenient but has also led to a significant increase in cyber fraud, with domestic payments fraud in India rising from ₹542.7 crore in FY 2021 to about ₹2537.35 crore in FY 2023.

How to secure yourself from cyber fraud threats? Premium
How to secure yourself from cyber fraud threats?

In today's digital age, convenience meets financial needs, but it also brings forth the looming threat of cyber fraud. In FY 2021, the domestic payments fraud recorded by the regulated businesses in India was around 542.7 crore; in FY 2023, it was about 2537.35 crore. In FY23, 9926 cases of digital loan app-related fraud were reported. 

Bankers are vulnerable to a variety of frauds since cybercriminals target individuals in need or are inclined to fall for a fake financial offer. To obtain a loan, borrowers intentionally lie or withhold important information. 

Unscrupulous lenders further the situation by charging exorbitant interest rates, offering loans without papers, or exploiting consumers' personal information. In India alone, banks registered over 9,000 banking and loan fraud complaints in the past year, with a cumulative total exceeding 60,000 crore.

Common loan fraud schemes and their prevention include the following:

Loan fee scams: Beware of swindlers promising loans with implausibly low interest rates and demanding upfront fees for processing, documentation, or insurance. Generally, legitimate lenders deduct processing fees from the loan amount; therefore, never pay processing fees in advance, especially using unconventional payment methods such as gift cards or cryptocurrency.

Fake loan offers: Scammers may contact borrowers via email, text, or phone with enticing loan offers while requesting sensitive personal information. To avoid becoming a victim, you should only conduct business with reputable financial institutions and refrain from sharing sensitive information unless the lender's legitimacy has been verified. Legitimate lenders leverage automated data verification platforms to ensure the authenticity of loan offers.

Identity theft: Protect yourself from identity theft by monitoring your financial statements and credit reports regularly. Report promptly any unauthorised loans to your bank and credit bureaus to avoid repayment demands for loans you never took out.

Loan churning: Unscrupulous lenders may promote frequent loan refinancing, frequently with concealed fees. Understanding the terms and costs of refinancing can help you avoid unnecessary debt and financial stress. Partnering with transparent financial institutions that provide clear terms and conditions can safeguard against unnecessary financial burdens.

Guaranteed loan scams: Be sceptical of con artists who offer "guaranteed" loans without credit checks or income verification. Before extending a loan, legitimate lenders conduct comprehensive credit evaluations, so avoid loans that do not require documentation or credit reviews.

Stolen loan documents: Safeguard personal documents such as copies of your PAN card and salary slips to prevent impersonators from obtaining loans in your name. Regularly monitor financial statements for out-of-the-ordinary activity and destroy sensitive information prior to disposal. Genuine financial institutions conduct digital document verification to ensure the credentials presented are genuine, offering an additional layer of security.

Vigilance is key

Nowadays, protecting yourself from loan fraud requires unwavering vigilance. Verify the authenticity of lenders, scrutinise loan documents, and avoid upfront fees for loan approval. By staying informed and cautious, borrowers can mitigate the risks associated with cyber fraud and ensure their financial well-being in an increasingly interconnected world. 

By partnering with forward-thinking financial institutions that harness modern technological solutions, borrowers can minimise risks and ensure their financial well-being

Ankit Ratan is the Co-Founder & CEO at Signzy

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Published: 24 Oct 2023, 10:49 AM IST
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