While digital payments are convenient, they are also vulnerable to financial fraud, as the proverb goes: "Where money is concerned, scams always follow!" This is especially true in the investment industry, where the rapid development of technology has spawned an abundance of opportunities. This improvement, however, throws a shadow: the rise of cyber fraud targeting investing platforms. With cyber investments becoming increasingly important around the world, cybercrime is on the rise, with 91% of investors reporting cyber incidents.
What’s in a fraudster’s arsenal?
Phishing scams: Fraudsters impersonate trusted investing platforms, banks, or financial organisations using emails, texts, and phone calls. They force victims to reveal private information and login passwords or divert them to fake websites.
Ponzi schemes: Scammers lure investors with big rewards and low risk. They use fresh investor cash to pay dividends to previous investors, establishing a facade of authenticity that crumbles as new contributions dry up.
Unregulated investment platforms: Fraudsters create unregistered investing portals like SEBI. Investors risk a lot on these platforms without regulation. Telegram Groups are popular for these schemes.
Fake apps and websites: Fraudsters create mobile websites and apps that resemble authentic platforms. These deceptive interfaces extract financial information, and even infiltrate reputable app stores such as Google Play and Apple App Store.
Pressure tactics: High-pressure scammers offer time-sensitive investments with unbelievable profits. Urgency discourages thorough investigation and forces rushed conclusions. For instance, unregistered LIC agents pitch enticing investment programs.
What should be in an investor’s arsenal?
As the wave of cyber fraud targets investment platforms, it is imperative for investors to arm themselves with knowledge and employ cautious behaviour. For the protection of hard-earned funds, it is essential to keep abreast of evolving fraud schemes, verify opportunities, and conduct exhaustive research. Adopting vigilance and due diligence enables investors to confidently navigate the investment landscape, ensuring their financial security. Creating a comprehensive file on investment fraud, comprehending victim rights, and reporting fraud to regulatory agencies and law enforcement are the initial steps in the recovery process.
Asset recovery can be aided by exploring options such as civil litigation, arbitration, and mediation, while law enforcement agencies should be contacted regularly to ensure progress against fraud. To ensure compliance with regulatory requirements, digital/automated KYC verification procedures employ AI, ML, and other cutting-edge technologies. Some aspects of digital KYC prevent financial fraud by enforcing stringent identification and verification procedures to weed out any fraudulent activity.
By integrating security into every aspect of their firm, from operations to employees and customers, investors can remain ahead of the curve.
Ankit Ratan, CEO and co-founder, Signzy