What is Financial Fraud?
Financial fraud is the considerable offence of hacking another individual's financial transactions or accounts, for a fraudster's gain. Fraudsters who commit these offences are well-trained and aware of how to receive the highest reward from a transaction. Financial fraud is increasing and therefore it is essential for individuals to protect their financial information from the potential corruption of fraudsters. It is important to be vigilant and aware of when financial fraud has taken place.
What are the different types of financial fraud?
Today, fraudsters are very sophisticated, and can infiltrate another individual's financial information through many different methods. In 2016 there was a 2% increase from the previous year which led the total of financial fraud losses to become a staggering £768.8 million. This daunting financial loss is a result of fraudsters attacking victims through various means. Consequently, organisations and individuals need to be aware of the varying forms of financial fraud which could affect them.
Credit/Debit Card Fraud:
This a common form of financial fraud. The widespread nature of this type of corruption is partly due to individuals not being vigilant enough to protect their financial information from fraudsters. All it essentially takes is for an individual to either lose their card or for a fraudster to steal an individual's card and then they can process unauthorised financial transactions. This will only be able to continue until the victim notifies their bank of what has happened. By March 2017 there had been around two million fraudulent cases reported and it was found that payment card fraud is the fastest growing. It is clear that we need to become more vigilant when it comes to our payment cards.
This occurs when a fraudster has managed to gain access to enough of your financial and personal information to create a fake card. This can be a very deceptive form of financial fraud, as the victim will rarely be aware of this occurring, due to them having their own bank card with them still. It will only be brought to the victim's attention once enough fraudulent activity has built up to create a cause for concern.
This is how financial fraud can potentially take place within the investment sector, as fraudsters have the potential to create an investment scheme which supposedly promises a high rate of return for fixed term investments. However, in reality the money is not actually invested and is instead used by the fraudster for their own financial benefit.
Due to the rise in online banking and the expanding cyber world in general, fraudsters have been able to utilise cyber outlets to attack online bankers. Phishing emails can be sent to online bankers with the pretence of being a bank and therefore they can request the login details and passwords of individuals, without it seeming out of the ordinary. Online bankers who invest in this phishing email will have all of their financial information compromised to the benefit of the fraudster.
How can you protect yourself against financial fraud?
Banks work extremely hard to combat fraud and to protect the financial and personal information of their customers through robust security systems. These security systems have proved to be fairly successful, as last year UK banks were able to stop £7 of every £10 of attempted financial fraud from occurring. Consequently, fraudsters have now attempted to contact financial customers directly by asking them for online banking passwords.
The director of Financial Fraud Action UK, Katy Worobec, has said that banks and the payment industry as a whole can only do so much to protect their customers against fraud. It is also the responsibility of an individual and a company to be vigilant with their payment conduct. The International Financial Reporting Standards (IFRS) has committed to making international financial markets fair and stable, and has contributed to the crackdown on financial fraud.
It is clear there are many bodies committed to putting an end to financial fraud, and therefore it is an individual's responsibility to be vigilant and understand specifically how finance fraud can affect them. If you have a suspicion that you have been a victim of financial fraud, contact relevant bodies such as Action Fraud or your bank to see what they can do for you.