This chapter intends to caution citizens about various schemes floated by fraudulent companies/persons and to take preventive measures to avoid losing their hard earned money. This chapter attempts to make investors aware about various fraudulent schemes floated and features through which such schemes can be identified.
Types of fraudulent schemes:
The common forms of fraudulent financial schemes which rely on doubtful/unviable business models are:
What is a Ponzi scheme?
How does a Ponzi scheme work?
Why would anyone be interested in investing such schemes?
The answer can be:
How to protect yourself from Ponzi schemes:
Ponzi schemes are banned under the Prize Chit and Money Circulation (Banning) Act, 1978. Though it is a Central Act, the respective State Governments are the enforcement agency of this law. These newly issued guidelines will allow states to make some change in their guidelines as per their localised requirements.
New Age – Cyber Scam
FREQUENTLY ASKED QUESTIONS
Always check details of the organization offering loans first and never transfer anything or give out your bank account details to any stranger.
You should always be sure regarding the credibility about the company offering such jobs. Many of the work from home schemes turn out to be ‘Get rich quick scams’ and are only means of luring people for getting high amount of money by doing simple tasks sitting at home. No money can be earned without hard work and never fall prey to such temptations.
The temptation to win a ‘jackpot’ is always high but a lot of it can be fraudulent. Here, you may get a notice or receive information that you’ve won something but need to send funds to pay for ‘customs charges’ or other fees to release goods or enable the huge prize money to be transferred to your account. Do not fall prey to such offers as they are not genuine. You will only end up losing your funds.
Guaranteed profits can generally be myths and are frequently used as tactics to trap gullible investors to invest in an exciting products or scheme that sounds highly attractive. These can be bogus schemes, generally known as Ponzi/Pyramid schemes. The offers like free holidays, travel etc. are only means to attract innocent investors.
You can report the details under “Report a suspicious scheme” screen of this portal. Alternately, you can file a complaint with the local police office/Economic Offence Wing Office.
If you’re an Internet user, please be aware of phishing scams that arrive in your inbox requesting money to be transferred. These scams are often under the disguise of ‘Help’ from someone you may know, a lottery ‘win’ that needs your bank details or even ideas to ‘double or triple your money in months’.
Scammers often use several clever tactics to send convincing and well-disguised emails to convince receivers to send money by threats or even invoking sympathy for a charitable cause. Some of the most common phishing methods include the following:
If the email is personal in nature and is from someone you know, always confirm with the person first before taking any further action. If the email seems to be from your bank or any financial institution you deal with, call them to validate it before sending anything. Often scammers mimic or disguise the email id so it seems like it is from the bank so it’s best to be safe and pay attention.
If you receive any email asking you to ‘update your account details’ or ‘verify your information because your account details were stolen’, exercise caution and call the bank first.
We’re often tempted by attractive offers or schemes – be careful when downloading or opening attachments as files can trigger a virus and your information can get stolen.
Instead of using links, type the bank or company URL in the address bar, as sometimes clicking on links will redirect you to a fake address. Make a practice of always typing in the URLs so you will memorize the accurate web address and not rely on links.
Maintain an awareness of the financial activity in your bank accounts and make a habit of regularly checking them. Report any suspicious or uncertain transactions to your bank account or credit card firm.
For any financial website that enables you to log in, ensure the URLs always start with “https://” as the ‘s’ stands for security. If you make purchases online, again ensure the web address of the online retailer starts with https:// and has a ‘lock’ icon on the status bar to ensure your details remain encrypted.
It is also a good idea to set a ‘transaction limit’ with your credit card provider for every purchase online as this limits your exposure as it prohibits transactions beyond the limit. Check with them to see if they offer this service.
If your bank or credit card provider offers SMS notifications for every transaction, enable it as you can keep tabs if your card has been stolen or misused. If you notice any suspicious transactions, call your bank immediately to block the card.