How to protect yourself from online financial fraud

Every year, millions of consumers fall victim to online financial fraud and internet scams. According to Statistics Canada, 6 in every 10 Canadian internet users reported a cyber-security incident in 2018.

The growth of internet has created a new platform for con artists to commit crime. And the truth is, these criminals keep getting more and more sophisticated to keep ahead of cyber security regulations.

As consumers turn to the internet for online shopping, video conferencing, and managing transactions online, there is a high possibility of falling victim to cybercrime. Luckily, you can protect yourself from online fraud by taking certain actions.

The 4 Common Types of Online Fraud


There are various types of fraud that online fraudsters use to deceive and defraud consumers of all ages, resulting in millions of dollars in lost incomes.

Fraudsters use these methods to illegally access personal information about the target such as passwords, credit card numbers, bank account details, etc.

The main types of online fraud include:

Credit card fraud


Online shoppers may be duped into submitting their credit card details on websites that are specifically built with malicious intent. It may also involve credit card theft, where criminals illegally use another person’s credit card to make purchases online or even draw cash advances.

Data breaches


Data breach involves gaining unauthorized access to sensitive company information. This information may be leaked to unintended parties or used to commit fraud such as hacking into customer accounts and taking large cash advances using stolen bank account information. Incidences of data breaches have been reported in large companies such as Twitter, Home Depot, and eBay.

Phishing


Phishing is a form of online fraud that attempts to gather valuable information such as account numbers, bank account passwords, credit cards, and store accounts. It occurs when a scammer sends fake emails to consumers, requiring them to provide private information such as their social security number, date of birth, and other information required to execute fraud. Consumers provide the information required based on the assumption that they are dealing with a legitimate entity. Apart from emails, phishing scams may use fake websites, text messages, and voicemails to get valuable information from their targets.

Investment Fraud


This form of fraud occurs when scammers disguise themselves as well-established investment firms offering high rewards by buying certain financial instruments or trading stocks. Investors who buy into the idea do not get any returns on the “investment”, and they lose all the money invested. 

7 Tips on How to Protect Yourself from Online Financial Fraud


If you want to protect yourself from cybercriminals, you can take the following measures:

Change password


If you have not changed your passwords for the last one year, you are giving fraudsters an easy time to compromise your accounts. Cybercrime experts advise consumers to change their passwords frequently and to use different passwords for each of their sensitive online accounts. If you have a problem remembering your passwords, you can use password vault services such as LastPass to secure your passwords in one location. Remember to use a mix of various characters such as upper case letters, numbers, special characters, etc. to make it difficult for scammers to steal your passwords.

Use trusted websites


Before providing personal information on online shopping websites, always ensure the website is encrypted. On the checkout page, confirm that the website has a green lock icon at the left upper hand corner of the page.

Monitor your credit


Checking your credit report every month or a few times each year can help you detect any suspicious activity in your account. Check your credit report for any suspicious credit inquiries, transactions, or cases of identity theft that you are unaware of. You can register to receive regular alerts from a credit monitoring service every time there is a new activity relating to your credit.

Learn how to check your credit score (for free), what it means, why it matters, how to find and fix errors, how to improve your credit rating and much more here!

Keep personal information confidential


When using a public computer or a public network, avoid entering your personal information on websites that are not encrypted. Also, do not share personal information via email, text, or phone, even if the callers identify themselves as bank representatives. Scammers often disguise themselves as service providers to get certain information such as social security numbers, credit card details, or physical address to commit a crime.

Activate Two-Factor Authentication


When registering a new email or online account, remember to activate two-factor authentication. This is an extra layer of security that requires users to go through two authentication stages before they can access the account. You will receive a special code either via phone or email that you can use to confirm your identity.

Shred sensitive documents


If you have sensitive documents that you no longer need, you should properly dispose them of without exposing personal information. For example, you can shred old bank statements and other documents containing your social security numbers, passwords, bank account numbers, bank passwords, etc.

Confirm financial communication


If you receive suspicious communication requiring you to provide certain bank information, you should first contact your bank directly to confirm if the communication came from them. Providing sensitive information to the wrong person can put your account at risk.

An imposter scam alert is a necessity these days because of the steady increase in the number and types of fraudulent activity that is reported. Stay educated on how to stay safe online and check out our other blog post, How to Avoid Loan Scams in Canada here.

Frequently asked questions about how to protect yourself from online financial fraud


What are the signs I am being scammed?

If a company you’ve never dealt with contacts you unexpectedly and asks you to pay some money, you should be wary. Also watch out for emails with grammar and spelling errors, or callers asking you to provide personal information such as credit card information, social security numbers, address, mother’s maiden name, etc.

How can you identify an online fraudster?

Online fraudsters use odd-looking phone numbers to disguise themselves as representatives of certain organizations. Most often, they say you have a problem with your account and require you to act fast. The conversation becomes heated if you are slow to act, and may even involve threats of dire consequences if you don’t comply.

Where can I report cyber fraud?

If you have been a victim of cyber fraud, you can report the incident immediately to the Canadian Anti-Fraud Center by calling 1-888-495-8501 or visiting their website at www.antifraudcentre.ca.

How can I prevent credit card fraudsters?

The number one tip to prevent credit card fraud is to keep your card safe from thieves and not to share your credit card information via emails or phone calls. Also, watch out for credit card skimmers in ATMs and gas stations, and beware of phishing scams. If your credit card is stolen, contract your credit card issuer immediately to cancel further transactions.

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Josiah Mwangi

Author

Josiah Mwangi is a freelance writer specializing in finance, business and real estate. His work has been featured on the Huffington Post, Finance Blog Zone, and other top publications

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