Unit 2- Economic Offences Types of Frauds

Unit 2- Economic Offences

1. Unit - Frauds in Various Sectors Phantom Regulations Phantom regulations are fake or non-existent rules misrepresented as valid legal obligations or suggestions. This dishonest practice can be found in several sectors, including insurance. It includes tricking people or organizations into thinking they must abide by rules that don't exist. 6. Identity Fraud illegally gets and uses another person's personal information without that person's knowledge or permission. This stolen information is then used to carry out a variety of fraudulent operations, such as opening new accounts, getting loans in the victim's name, or engaging in unauthorized financial transactions. The victims of identity fraud may suffer severe economic and psychological effects.

2. Ways to Avoid Insurance Fraud Inspect Every Detail of the Insurance Provider Avoid Paying Premiums with Cash Do Not Share Sensitive Information or Documents Read All Policy Details Thoroughly Be Sure of Your Policy Documents Prefer Internet Insurance Policy Acquisition

3. Types of Insurance Frauds in India 1 . APPLICATION FRAUD policyholder intentionally provides fake information on the life insurance application about health, occupation, or financial status to qualify for a lower premium or a larger policy benefits. This is also known as concealment or material misrepresentation , 2. CLAIMS FRAUD Claims fraud is when a policyholder or nominee files a false life insurance claim. This could include things like faking own death or murder to avail the policy benefits . 3. FORGERY Forgery happens when someone (usually family members) alters or forges a life insurance policy. This could include things like changing the beneficiary or increasing the death benefit without the knowledge of policyholder . 4. PHONEY POLICY FRAUD Phoney policy fraud occurs when a customer is sold a fake life insurance policy. This type of fraud is often committed by fraudster who sell fake policies to unsuspecting consumers or assures extra bonuses or loan offers. The premiums are pocked by the fraudster and customers not only lose the money but also do not get policy benefits. 5 . IDENTITY THEFT Identity theft occurs when a person steals customer’s personal information and uses it to commit fraud. The fraudster then collect the policy benefits even though they are not the actual policyholder.

4. How to Save Yourself from Insurance Fraud? Do your research before you buy a life insurance policy:   Be careful about what information you provide:  Keep an eye on your policy:  If you notice any suspicious activity, such as changes to the beneficiary, communication details etc.,, contact your insurer immediately. Do not click on any link from unverified sources for making payment or sharing personal or confidential information. Do not fall to the promises regarding loan offer, bonuses from existing policies, extra benefit transfer etc., Do not share your sensitive/confidential details as well as copies of your KYC with strangers.

5. Bank Frauds

6. TOP BANK FRAUDS IN INDIA Here is a list of some of the highly prevailing bank scams in India-   Automatic Withdrawal Scams Phishing Scams Charity Scams Overpayment Scams Cheque-Cashing Scams Government Masquerader Scams Spoofing Bishing Skimming SmishingSIM Swap 1 . Automatic Withdrawal Scams: you might receive either a call, SMS, postcard, etc., stating you have won a prize or an exciting offer. Next, the scammer will demand the bank details and ask for the numbers mentioned below your cheque.   The moment the scammer avails of the banking details, they put it in a demand draft and file with the bank. Once the bank receives the same, it will transfer the sum of money from your account to the scammer.

7. Bank Frauds Scam 2 - Phishing Scams Phishing scams are mostly done via mediums such as SMS and e-mail directed to a link. Through such fraud, scammers send clickbait messages that resemble official bank messages. Such links may ask you to fill in personal information, including your mobile number, account number, OTP, etc. After gathering your personal information, the scamster will hack into your account and steal your money in no time.   Scam 3 - Charity Scams Charity scams are emotional ways to influence naive people to donate their money. Through such a scam, fraudulents take the benefit of people’s empathy by impersonating charitable organisations.   People often fall for such scams as they directly trigger emotions. Misled people end up donating to such fake charities and lose their money to scammers.  

8. Bank Frauds Scam 4 – Over payment Scams Such scams are often targeted towards sellers operating their business online.   Scammers pose as buyers and send off a cheque (a fake one) as their payment for a price that is higher than it should be. Next, they will demand a refund of the difference via online mode.   But, since the original payment was fake, now, while repaying, the seller ends up losing the refund money and the price of the product sold.   Scam 5 - Cheque-Cashing Scams This is another emotion-triggering scam that crooks often undertake.   Here’s an example to understand this - Mr John was just coming out from the bank and was suddenly approached by a person asking if he could help him cash a cheque as he doesn’t have an account in that bank. John decides to help him as he can deposit the cheque and withdraw cash from the bank. Post the clearing process, the cheque didn’t clear, and the funds were held against John’s account.

9. Bank Frauds Scam 6 - Government Masquerader Scams Frauds in banking sector by impersonating a government official has been quite common. Herein, a scammer calls up, claiming you’ve won a lottery that requires some fees or tax payment to process the prize money further.   On denial, the scammer threatens to file a complaint on non-payment of tax/fees. People often fall for such fake claims and end up paying the sum. This fraud has happened to numerous people across the country due to less awareness.     Scam 7 - Spoofing: Website spoofing is the act of creating a website, as a hoax, with the intention of performing fraud. To make spoof sites seem legitimate, phishers use the names, logos, graphics and even code of the actual website. They can even fake the URL that appears in the address field at the top of your browser window and the Padlock icon that appears at the bottom right corner.

10. Bank Frauds Scam 8 - Vishing : Vishing is an attempt of a fraudster to take confidential details from you over a phone call like user id, login & transaction password, OTP (One time password), URN (Unique registration number), Card PIN, Grid card values, CVV or any personal parameters such as date of birth, mother's maiden name. Fraudsters claim to represent banks and attempt to trick customers into providing their personal and financial details over the phone. Scam 9 - Skimming: Skimming is an act of stealing information through the magnetic strip on the cards that are used in ATMs and merchant establishments. Fraudsters collect information from a credit/debit/ATM card by reading the magnetic strip on the reverse of the card. For doing this, they conceal a small device in the card slot of ATM's or merchant payment terminals. This 'skimmer' scans the card details and stores its information. Tiny strategically positioned camera may also be used to capture the PIN. Skimming can occur in ATMs, restaurants, shops or other locations.

11. Bank Frauds Scam 10 - Smishing : It is a combination of short message service (SMS/ text messaging) and phishing (the act of emailing someone with the intent of obtaining personal information that can be used for identity theft). Messages are being received across the country by cell phone users claiming their accounts are delinquent, need to be updated or even to register for a new program. Links in the message and toll-free telephone numbers are being used for this fraud.   Scam 11 - SIM Swap: Under SIM swap/exchange, fraudster manages to gets a new SIM card issued for your registered mobile number through the mobile service provider. With the help of the new SIM card fraudster gets OTP & alerts required for doing financial transactions through your bank account.

12. Bank Frauds Scam 12 -Card skimming Card skimming is a type of theft or bank fraud where the criminal makes use of the skimming devices to steal card information. This skimmer is usually installed in the POS machine or ATM for obtaining personal data from ATM, debit, or credit cards and then use to create a duplicate card to withdraw money from the customer’s account through an ATM or a merchant location. The electronic device captures and stores key information from the magnetic strip of your credit/debit card, so once you recognize the threat it’s advisable to replace your magnetic plastic card with a chip-based card.     Scam 13 - Fraud via QR code scan It is a common ploy of fraudsters using a variety of ruses persuading you to scan Quick Response (QR) codes using the apps on your phones and the goal of QR code extortion is pretty much often the same. Using false information, fraudsters can also approach users and slowly win their trust, then navigate to a page through which cyber criminals steal your data or money.

13. Corporate Frauds What Is ‘Corporate Fraud ’? Corporate fraud consists of activities undertaken by an individual or company that are done in a dishonest or illegal manner, and are designed to give an advantage to the perpetrating individual or company. Corporate fraud schemes go beyond the scope of an employee’s stated position, and are marked by their complexity and economic impact on the business, other employees and outside parties .

14. Types of Fraud:- There are many types of corporate fraud, including the following common frauds: Theft of cash, physical assets or confidential information Misuse of accounts Procurement fraud Payroll fraud Financial accounting mis -statements Inappropriate journal vouchers Suspense accounting fraud Fraudulent expense claims False employment credentials Bribery and corruption.

15. What Are the Precautions Taken By All Companies? 1. Know Your Employees 2. Make Employees Aware/Set Up Reporting System 3. Implement Internal Controls 4. Monitor Vacation Balances 5. Hire Experts 6. Live the Corporate Culture There are various types of Corporate Fraud: Financial Misappropriation: Misappropriation of payments, Fudging the books of Account, misleading the investors to invest by rapidly increasing the share price. Misappropriation of Assets: Embezzling receipts, stealing physical assets, intellectual property rights, Dummy payments using an entity assets for personal use. Corruption: Making or receiving improper payments, offering bribes to public officials or private officials, Abetting, taking political support to commit fraud.

16. Types Of Credit Card Fraud Credit card fraud comes in all shapes and sizes. It can happen online,  over the phone ,  by text  and in person. You can be duped by  fake emails , have your information stolen in a data breach, or have your cards stolen out of your mailbox. And these are just a few of the possibilities. To  protect yourself  from becoming a victim, you need to know about different kinds of credit card fraud. While solid prevention won't make you immune to it, being cautious can reduce your chances. Here are some of the most common types of credit card fraud: Card-not-present (CNP) fraud Scammers steal a cardholder's credit card and personal information — and then use it to make purchases online or by phone. CNP fraud is difficult to prevent because there is no physical card to examine and the merchant can't verify the buyer's identity . Credit card application fraud Criminals use stolen personal information (name, address, birthday, and social security number) to apply for credit cards. This type of fraud can go undetected until the victim applies for credit themselves or checks their credit report. While the victim will typically not be responsible for any purchases made with fraudulent credit card accounts due to protection offered by the cards, this type of fraud can damage the victim's  credit score .

17. Account takeover After stealing personal information, scammers contact credit card companies pretending to be the cardholder. They then  change passwords  and PIN numbers so they can take over the account. This type of credit card fraud will likely be detected when the cardholder tries to use their card or log in to their account online . Credit card skimming The practice of  credit card skimming  is still happening, despite the prevalence of cards. Skimmers are devices that steal credit card information from the magnetic strip on the back of the card. Scammers attach them to credit card reader machines in ATMs, retail stores, gas stations and other businesses. Then they either sell the information to other scammers or use it themselves to make charges on your card. Lost or stolen cards One of the most basic credit card fraud   schemes is to simply steal someone's credit card or use a card someone has lost. Thieves also intercept credit cards sent to cardholders in the mail.

18. Protecting Yourself From Credit Card Fraud Never provide personal or financial information in response to emails, texts, or phone — even if it looks like it's coming from a company you do business with. Remember, no reputable company — including Synovus — will ever request your personal information via email, text, or phone . To protect yourself from skimming, avoid suspicious card readers, like ones with sticky keypads or that seem to be haphazardly attached to an ATM or gas pump . Shield your PIN and account number from bystanders and store employees when using your card in person . Don't let mail sit in your mailbox for an extended period of time. It's not just credit cards themselves that thieves can steal, but also financial statements. Since these contain your name, address, and account number, it gives thieves a head start in CNP scams. If you'll be away, place a  vacation hold 2  with the post office. And for additional protection, consider moving to  paperless statements . Set up  account alerts  to notify you of suspicious transactions — for example, charges over a certain dollar amount.

19. How To Detect Credit Card Fraud Unauthorized or suspicious charges Review your monthly statements carefully t Receiving a credit card statement Check whether the credit card been provided Don’t provide information on any unsolicited phone calls for enquiring the cards   How To Report Credit Card Fraud If you discover fraudulent transactions — or if your card is lost or stolen — contact your credit card company immediately to report the fraud. Ask them to cancel or suspend your account. They will tell you how to destroy any existing cards and when you'll receive replacement cards. You can also file a police report by contacting your local police or sheriff's office. In most cases, local authorities aren't equipped to handle credit card fraud cases. However, some creditors require police reports as part of their investigation into your fraud claim.

20. Online Purchases with Stolen Card Information Skimming Devices at ATMs Identity Theft for Credit Card Applications Card-Not-Present Transactions Counterfeit Cards Account Takeover Lost or Stolen Card Fraud Friendly Fraud: Here are some examples of credit card fraud:

21. PONZI SCHEME A Ponzi scheme is a type of investment scam that promises high returns to investors with little or no risk involved. Named after Charles Ponzi, who notoriously perpetrated such a scheme in the early 20th century, Ponzi schemes operate on the principle of using funds from new investors to pay returns to earlier investors, creating the illusion of profitable investment activity. Here's how a typical Ponzi scheme works:

22. PYRAMID SCHEME A pyramid scheme is a fraudulent investment scheme that promises participants high profits based primarily on recruiting others to join the program rather than on the sale of goods or services. This type of scheme is structured like a pyramid, with a small group of early participants at the top who recruit new participants to form the base of the pyramid. As new participants join and invest money, they are encouraged to recruit even more participants, and the cycle continues.

23. Here's how a typical pyramid scheme works: Here's how a typical pyramid scheme works: Recruitment Building the Pyramid Investment and Recruitment Unsustainability   Pyramid schemes are often disguised as legitimate multi-level marketing (MLM) or network marketing opportunities, they focus primarily on recruiting participants rather than selling actual products or services. the majority of their revenue from the sale of products or services to end consumers, rather than from recruitment fees or investments. Pyramid schemes are illegal in many countries because they inevitably result in financial losses for the majority of participants while benefiting only a small group individuals should exercise caution, conduct thorough research, and be wary of investment opportunities that promise high returns based primarily on recruitment rather than on the sale of legitimate products or services. Additionally, regulatory authorities provide resources and information to help consumers identify and avoid pyramid schemes and other investment scams.

24. ILLICIT TRAFFICKING IN: ARMS Illicit trafficking in arms is a serious global issue that involves the illegal trade, transportation, and distribution of firearms, ammunition, explosives, and related materials . This illicit trade fuels armed conflicts, terrorism, organized crime, human rights abuses, and destabilizes communities and regions around the world. Black Market: Criminal networks operate sophisticated black market networks to procure and distribute illicit arms . These networks exploit legal loopholes, corruption, and weak law enforcement to traffic arms across borders and evade detection. Diversion from Legal Channels: Illicit arms are often diverted from legal sources, including military stockpiles, arms manufacturers, and legitimate arms dealers. Corrupt officials, insiders, or criminal elements within these industries facilitate the diversion of arms into illicit channels. Surplus Weapons: Surplus weapons from conflicts or military stockpiles can also fuel illicit arms trafficking. Arms left behind or abandoned during armed conflicts are often smuggled and sold on the black market, perpetuating violence and instability in conflict-affected regions. Sources of Illicit Arms:

25. Destination and Use of Illicit Arms: Illicit arms trafficked through black markets or diverted from legal channels are used for various illicit purposes, including: Armed Conflicts: Illicit arms trafficking exacerbates armed conflicts by supplying weapons to non-state actors, insurgents, and terrorist groups. These groups use illicit arms to sustain violence, expand territorial control, and perpetrate human rights abuses against civilians. Organized Crime: Criminal organizations use illicit arms to engage in violent activities such as drug trafficking, human trafficking, extortion (threaten and getting money), and kidnapping. Firearms are used to intimidate rivals, enforce control over territories, and protect illicit operations. Terrorism: Illicit arms are a key enabler of terrorism, providing terrorist groups with the means to carry out attacks, target civilians, and undermine security and stability. Terrorist organizations procure illicit arms to enhance their operational capabilities and inflict mass casualties. Civil Unrest and Violence: Illicit arms contribute to civil unrest, social instability, and violence in communities and urban areas. Criminal gangs and armed groups use firearms to perpetrate (do) violent crimes, including armed robbery, assault, and homicide, leading to insecurity and fear among the population.

26. Impact and Challenges of Combatting Illicit Arms Trafficking: Illicit arms trafficking poses significant challenges for law enforcement, border security agencies, and international efforts to combat organized crime and terrorism. Some key challenges include: Transnational Nature: Illicit arms trafficking is transnational in nature, involving complex networks of suppliers, traffickers, and buyers across multiple countries and regions. Coordinating international efforts to disrupt these networks and prevent the flow of illicit arms is challenging. Corruption and Complicity: Corruption among law enforcement officials, border guards, customs officers, and government officials facilitates illicit arms trafficking Demand and Supply: The demand for illicit arms is driven by factors such as armed conflicts, organized crime, and terrorism, creating a lucrative(profitable) market for traffickers. Disrupting the supply of illicit arms requires addressing(to find out) the root causes of conflict, instability, and criminality. Limited Regulation and Oversight: Weak regulation, inadequate oversight, and porous borders in many countries contribute to the proliferation(increase) of illicit arms trafficking. Strengthening legal frameworks, improving border security measures, and enhancing international cooperation are essential to combatting (control to) this illicit trade.

27. Explosives are highly dangerous materials that can cause mass casualties, destruction of property, and destabilization of communities when in the wrong hands. Illicit trafficking in explosives involves the illegal trade, transportation, and distribution of explosive materials, including improvised explosive devices (IEDs), military-grade explosives, and commercial explosives, for illicit purposes such as terrorism, organized crime, and insurgency. ILLICIT TRAFFICKING IN: EXPLOSIVES Sources of Illicit Explosives: Black Market, Diversion from Legal Channels, Illegal Production : Destination and Use of Illicit Explosives: Terrorism: Illicit explosives are a primary tool used by terrorist organizations to carry out attacks against civilian targets, government facilities, infrastructure, and critical assets. Organized Crime: Criminal organizations use illicit explosives for various illicit purposes, including extortion, intimidation, and sabotage. Explosives are used to carry out targeted attacks, destroy rival operations, and enforce control over territories. Insurgency and Conflict: Illicit explosives are often used by insurgent groups and armed militias to perpetrate violence, undermine government authority, and destabilize regions affected by armed conflict. Improvised explosive devices (IEDs) are a prevalent threat in conflict zones, causing casualties among military personnel, civilians, and humanitarian workers.

28. Impact and Challenges of Combatting Illicit Trafficking in Explosives: Public Safety: Illicit trafficking in explosives poses significant risks to public safety, as these materials can be used to cause mass casualties and destruction in populated areas. Terrorist attacks and bombings using illicit explosives can result in loss of life, injuries, and psychological trauma among affected communities. National Security: Illicit explosives pose a threat to national security by enabling terrorist groups, criminal organizations, and insurgent movements to carry out attacks, undermine government institutions, and destabilize regions. Preventing the proliferation of illicit explosives is essential to safeguarding national security interests. Law Enforcement Challenges: Combatting illicit trafficking in explosives presents numerous challenges for law enforcement and border security agencies, including limited resources, porous borders, corruption, and the transnational nature of illicit networks. Strengthening law enforcement capabilities, enhancing intelligence sharing, and improving international cooperation are critical to addressing these challenges.