Table of Contents
01
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Meaning of fraud
1. What is the meaning of fraud
Any actions are taken to take advantage of someone else dishonestly. In other words, anyone who commits hurtful, unlawful, or immoral conduct is guilty of a civil wrong or a criminal offense.
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Types of fraud in banking
These are the types of fraud in banking –
- Account opening fraud
- Card Skimming
- Advance Fees Fraud
- Phishing Fraud
- Cheque kiting
- Accounting data fraud
- Cheque fraud
- Bank hacking fraud
- Money laundering fraud
- Loan fraud
- Counterfeit securities
- OTP Fraud
- Letters of Credit
- Money transfer fraud
1. Account Opening Fraud
Account opening fraud refers to the creation of a bank account for the purpose of depositing and cashing fake checks. One of the most widespread scams in the world is this one. Additionally, most of these accounts are opened with fictitious documentation to prevent discovery.
2. Card Skimming
Card skimming is a technique used by fraudsters to record data from users’ debit and credit cards to carry out fraudulent transactions.
For Example – A skimmer is a type of fraudster that copies your credit card information to perform this type of fraud. The data will be sent to a designated computer for storage and eventual use in fraudulent operations.
3. Advance Fees Fraud
When a victim gives money to someone in anticipation of obtaining something, this is known as advance fee fraud. For example, a loan, contract, investment, or gift is received, and then little to nothing is given back.
4. Phishing Fraud
Phishing is a form of internet fraud where private user information, such as login credentials, one-time passwords, and credit card numbers, are stolen. Phishing can also be carried out by responding to phony emails, texts, and phone calls with bank information.
For Example – Fraudsters frequently contact customers to renew their credit card or bank account to obtain their victims’ bank account information and one-time passwords (OTPs) so they may conduct fraud.
5. Cheque Kiting
Cheque kiting is the unlawful act of writing a check to a bank account that does not have enough money in it to cover the amount. This assumes that banks take a few days (or even longer for overseas checks) to decide whether a check is bad.
For Example – You deposit $2,500 in one bank, then write a check for that amount and deposit it to your account at a different bank; as a result, you have $5,000 available to you until the check clears.
6. Account Data Frauding
To conceal a significant financial issue some businesses falsify their books to inflate their sales, profits, and market value when the business is losing money. These false documents may assist the business in obtaining bank loans, among other things.
7. Cheque Fraud
The three main types of check fraud are as follows:
1. Altered – A check that has been legitimately issued by the account holder but has been changed, often by fraudsters, to modify the payee name or the cheque’s value.
2. Counterfeit – A simple piece of paper that has been altered to look like bank check paper can then be used to create a real check that is linked to a real bank account that has been set up and issued by a fraudster.
3. Forged-This fraud involves a real cheque that was stolen but was not signed by the account holder. The check’s signature was added by the fraudster.
8. Bank Hacking Fraud
Gaining access to bank information by computer hacking and manipulation in order to make deposits, transfer money unlawfully, or remove any record of transactions. However, spreading malware or hacking into bank computers or networks would lead to computer fraud.
9. Money Laundering Fraud
Money obtained illegally and deposited in banks by transforming the cash into undetectable transactions is known as money laundering. Fraudsters’ attempts to make money appear to have originated from a legitimate source.
For Example – If someone is selling drugs, they could try to make it look like the money comes from a company and put it in the company’s account.
10. Loan Fraud
Loan fraud refers to the lending of money to a borrower who has gone over his credit limit or to a non-borrower.
For Example – Loan fraud occurs when people use fraudulent information to get a loan. Another instance of loan fraud is when a burglar obtains a loan in someone else’s name by using that person’s identification.
11. Counterfeit securities
When presenting documents, securities, bonds, shares, and certificates to a bank to obtain a loan using these instruments as collateral, they are often falsified, duplicated, changed, or otherwise altered.
12. OTP Fraud
The codes that make up the OTP messages sent by telex could be changed to direct the money to a different account, making it easier for fraudsters to move money.
13. Letter Of Credit
Generally, importing items on credit is done through letters of credit. The majority of international trade uses this. Most often, letters of credit fraud are committed against banks by presenting fictitious documents indicating that products have been transported when none have been.
14. Money Transfer Fraud
Money transfers using organizations like Western Union and Money-Gram are used by scammers as part of numerous schemes to obtain your funds. For fraudsters to obtain the money before the victims are aware that they have been defrauded, scammers put pressure on people to make money transfers as rapidly as possible.
Online cash transfers are equivalent to sending cash, and the sender is not protected. Moreover, there is no way for anyone to undo the transaction or find the money.
