How To Protect Financial Information and Report Fraud

The previous chapter was an eye-opener on the different kinds of financial fraud. From phishing, identity theft, and Ponzi schemes to investment frauds, prize scams, impersonation scams, and tech support frauds, there is a lot you need to watch out for. Getting scammed can not only lead to monetary losses and disrupt your overall financial well-being but also cause immense distress. 

It is thus quintessential to:

• Keep your personal financial information secure 
• Spot and avoid being exposed to fraudulent activities 
• Report fraud to the right authorities 
• Seek legal guidance if required 
• Work with credit bureaus 

Let’s delve deeper into each of these. 

Protecting Personal Financial Information 

It is important to know about the different ways in which you can keep personal financial data secure so that fraudsters cannot misuse your identity, accounts, or cards. Remember, you have a significant role to play in preventing privacy and data breaches. Here are some solutions to try online and offline: 

• Use a strong password – Complex passwords are hard for hackers to guess, making it difficult for them to access sensitive data. They cannot steal your credentials easily or use them to make unauthorised purchases, credit applications, etc. Usually, a mix of alphabets (both lowercase and uppercase), symbols, and numbers can do the trick. Avoid using commonly used words, your birth date, or name. Also, every account should have a different password.
• Trust websites with two-factor authentication – Enter your financial information only on websites that have authentication methods requiring two or more distinct factors. This means that to access any information on such sites, you need to authenticate yourself twice. This could include entering a password, followed by a code sent to your registered mobile device, or a biometric check like retina, face, or fingerprint.
• Follow safe browsing practices – Browse cautiously to spot and stay away from phishing websites that trick you into sharing sensitive details. Transact on legitimate websites only so that cybercriminals cannot intercept any information, steal money from your account, or use your card details to make purchases.

Below are some tips that may be helpful:

• Ensure the website has a padlock symbol in the address bar and https:// in the URL.
• Keep your browser updated with the latest security features.
• Avoid public Wi-Fi networks for financial transactions or use a Virtual Private Network (VPN) to mask your IP address.
• Check if the website URL has spelling mistakes or a strange domain.  
• Enable your devices with firewalls to prevent malicious attacks and install reliable anti-malware software.
• Don’t click on random links that you receive via text messages or emails as they may be phishing attempts.
• Log out of your accounts after you are done, especially when using public or shared devices.
• Use the incognito mode on shared or public devices, so that your passwords or browsing history don’t get stored.

Monitoring Financial Statements 

Keeping an eye on personal financial statements can help you detect anomalies or unfamiliar transactions. Wondering how you can do this? Read below:

• Review bank statements regularly to track credits, debits, and account balances. Report transactions that seem unauthorised immediately. 
• Go through credit card statements periodically and ensure every listed transaction is accurate. If you spot anything unusual, contact the card issuer. 
• Set up alerts for your bank accounts and credit cards, so you are notified immediately in case of a large transaction, suspicious activity, or low balance. 

Safeguarding Personal Documents

Keeping personal financial papers safe is necessary so they don’t fall into the hands of fraudsters. This is what you can do:

• Keep important physical documents in a bank locker or a secure fire-resistant vault at home. Digital documents should be encrypted before you store them on your devices so that fraudsters don’t understand the contents even if they get their hands on them. 
• Back up digital documents regularly to a secure cloud storage platform or external hard drive. 
• Shred unnecessary documents so that the data cannot be intercepted or misused. 

Avoid Scams and Fraudulent Activities 

The best way to avoid getting scammed is by being watchful and educating others. We have already covered the common types of financial fraud that happen these days in the previous chapter. You can also: 

• Research regularly and find out about the latest techniques being used by scammers. 
• Follow reliable news sources to stay aware of the latest trends in fraud and any major incidents. 
• Be careful about unsolicited emails, messages, and investment or business offers that seem unbelievably good. 
• Attend workshops or programmes on financial literacy organised by institutions or local authorities. 
• Inform and educate loved ones about financial scams and how they might be impacted both monetarily and mentally. 

Reporting Financial Frauds

It is advisable to report financial frauds at the earliest, so you can stop scammers from causing further harm to you and others, minimise losses, alert authorities about future risks, prevent money laundering, and fulfil your legal obligations. The following steps can help: 

Contacting Financial Institutions

• If you suspect any fraudulent activity in your bank account or on your credit card, contact the bank or card issuer without delay. 
• Provide sufficient details such as date and time of transaction, amount transacted, merchant name, etc. 
• You might have to fill up a formal dispute or complaint form or send a letter to the bank or card issuer’s address. Maintain a copy of such communications for future reference. 
• The compromised account might have to be closed or frozen to prevent further losses. You may also need to change your PINs and passwords. 

Reporting on the National Cybercrime Reporting Portal

• To report an online financial fraud, either call the helpline number 1930 or head to cyber crime online portal 
• Register the complaint by providing details about the incident along with your identification proof. 
• Once done, you can track the complaint and even conduct a suspect search with email, mobile number, website name, etc. 

Filing a Local Police Complaint 

• Visit the local police station based on the location of the fraud (so that it’s under their jurisdiction) and provide essential details. 
• Draft a letter of complaint, mentioning the fraud, your personal details, proofs, if any, etc. 
• Share necessary documents to strengthen your report, such as credit card or bank statements. 
• File an FIR to make it official. 
• Obtain an acknowledgement of your complaint and a copy of the FIR. 

Seeking Legal Recourse  

In India, if you end up as a victim of financial fraud, you have certain rights that can help you attain justice or compensation. Broadly, you have the right to: 

• File a complaint at the local police station with details of the fraud, any evidence, and relevant documents. 
• File an FIR, which will officially outline the details of the fraudulent incident. 
• Stay updated about any progress made in the fraud investigation. 
• Cooperate by supplying additional information or documents. 
• Consult legal professionals and request representation if necessary. 
• Report to regulatory bodies like the Reserve Bank of India (RBI) or the Banking Ombudsman. 
• Maintain confidentiality during the investigation process. 
• Seek compensation, remedies, or redressal for the damage.  

Hiring Legal Representation 

You might need to seek legal guidance in case of a major financial fraud, for which, consider the following: 

• Decide which type of attorney is suitable for your situation, depending on whether the fraud is more along the lines of a civil violation, criminal offence, or commercial scam. Speak to attorneys in different fields before deciding. 
• Research different attorneys and check their qualifications and experience in handling relevant fraud cases. Go through reviews to gauge their repute, dependability, and track record.  
• Discuss your case and ask how they intend to approach it and what strategies they will use. 
• Find out if they have been able investigators to unearth evidence or handle unexpected complications. 
• Ask about the possible outcomes of your case. 
• Discuss the attorney's payment terms and assess whether they suit your budget. 

Working with Credit Bureaus 

Credit bureaus in India operate as per RBI’s regulations and prepare credit reports and scores of individuals based on their payment behaviour, credit history, and borrowing patterns. They provide your credit information to financial institutions for a fee. Working with such bureaus can help you protect your personal financial information and prevent fraud. 

Placing Fraud Alerts on Credit Reports

• Inform any one of the key credit bureaus that you are apprehending identity theft and want to prevent scammers from availing credit under your name. 
• Request a temporary (90 days) alert if you spot suspicious transactions on your credit card but are unsure about identity theft. In case someone has stolen your identity and you can prove it, an extended alert (7 years) can be requested. 
• You can renew a fraud alert after it expires or remove it. If you want it removed before expiration, inform each credit bureau separately. 
• Having a fraud alert on your credit report will help creditors conduct a more thorough investigation before sanctioning a loan to you. 
• Check your credit report periodically so you can detect any unusual activity at the earliest. 

Correcting Errors on Credit Reports 

• Review credit reports carefully to ensure that every piece of information is accurate – whether it involves personal details, payment statuses, or accounts. 
• If you notice any error or discrepancy, make a note instantly. Create a list of all such errors after examining all the reports. 
• Gather documents that support your claim regarding such errors, be it payment messages, bank statements, etc. 
• Draft a dispute letter that lists and explains each error and send it to the credit bureau. 
• Follow up with the bureau for dispute resolution and go through the updated report to make sure that the errors have been rectified. 

Wrapping Up

Being aware of financial frauds, adopting safe practices during transactions, watching out for suspicious activities, and taking the right action when needed are the best ways to protect your personal financial information and well-being. 

In the next module, we will explore everything on income tax, the types, planning strategies, brackets, deductions, and more, so you can plan a stable financial future.