Guarding yourself from misselling and bank frauds


An elderly acquaintance Mr Sahni, called asking for help. He was checking his bank statement and noticed that some monies had been transferred to unknown accounts, even though he had not issued cheques for the same. On further investigation, found that a bank employee had forged Mr Sahni’s signature, changed his mobile number and moved funds out.

Mr Sahni had received a text message from the bank informing him of the change in mobile number, but did not go through it in detail or act upon it. Dealing with the bank and police is painful for Mr Sahni and he is unlikely to get his money back.

Banking and digital frauds are getting bigger and these frauds are targeting citizens in all age groups. From scams asking people to use their account for routing funds to mass targeting of individuals, the methods of deception have changed. The common one is asking people to click on a link to update KYC or for rewards points or other financial transactions.

Then there are mails from regulators asking for pending amounts to be paid up. With markets doing well, many messages on doubling money within a month, were doing the rounds last year.

Despite best efforts by RBI through mass media literacy campaigns on not sharing OTPs or downloading apps/clicking links from unknown entities, people continue to fall prey to fraud.

If it was not enough to deal with external scammers, internal employees of financial services entities are no less in trying to cheat gullible customers.

Apart from forgery, one of the biggest fraud is rampant mis-selling of investment products especially insurance schemes. Mr Sahni was also sold a “saving plan” by his relationship manager. The plan gave 8% p.a. return compared to 6%p.a. return on fixed deposit. Little did Mr Sahni, know he was sold a capital guaranteed insurance which gives a net return of 4-5% only. This is not only lesser than the fixed deposit return, but locks in his money, which is not desirable at his age.

From the relationship manager to teller, everybody is trying to sell insurance schemes at banks.

In the good-old days, the phone was only for talking. Probably, using it for talking and staying away from using it for banking is a good idea.

Meanwhile, here is also what you need to do to protect yourself against frauds

Be alert on SMS received from the bank. Contact the bank immediately if you find something amiss.  Do not click on any link received. Login to your online banking portal to check for any pending transactions, for which you may have received the link.

Do not give your phone to anybody (bank staff or relatives) for help with transactions. Unless you really need to, do not download banking apps.

Do not believe bank employees blindly on investment product recommendations. Study the scheme features carefully and remember other than FDs and small savings schemes, no other product gives guarantee returns.

No regulator will call or email asking for payments. Ignore such communication.

Keep the contact number of the bank handy. This can be got from the bank website or on the back of your debit card.

Do not go by numbers got from an internet search.

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