Consumer fraud and insurance
CONSUMER FRAUD:
What is consumer fraud?
Fraud can involve the use of deceptive and unfair business practices. Fraudsters typically target the elderly and students,
however all consumers are at risk. Consumer frauds can be split into two categories: Identity (personal information) theft and
financial fraud. Financial fraud typically occurs when a victim spends money hoping that it will return large profits, buys a
product that never delivers to his doorstep or isn’t the same as in the picture, or even a legitimate subscription service that is
really easy to subscribe to, but is abysmally hard to cancel.
Some common financial frauds can include:
Online Shopping
Dark patterns
Pyramid and Ponzi scheme
Fast loans
Fake giveaways, prizes and lottery
Fake Charities
Online Shopping fraud can be described as purchasing a product that isn’t the same as advertised, or that’s never delivered to
your house. This fraud mostly comes from websites that have terrible or no buyer’s protection at all. So using sites that can
give a full refund if the product doesn’t meet its expectations can prevent wasting money.
Dark patterns are one of the ways to trick the customer into subscribing a paid service that can be very hard to cancel
afterwards. They can hide it behind obscure menus on their websites or require you waiting in an intentionally long queue on a
phoneline that will try to convince you to stay, or other tedious ways to try to discourage the user to unsubscribe. Sadly dark
patterns aren’t illegal, nor are used only for subscribing for a service.
Pyramid schemes (and their ponzi scheme counterpart) is an investment scam that pays early investors with money taken
from later investors to create an illusion of big profits.
A ponzi scheme promises a high rate of return with little risk to the investor. Lately this type of fraud is assuming you to do
some minor online job but to enter the team you have to invest some money. It creates an illusion that you are paid for your
work. Afterwards the company offers more money for your work, but you have to invest more money as well. At the end one
day you receive a message that the company failed and all your investment is gone. Ponzi scheme is similar to a pyramid
scheme in that both use new investors’ funds to pay earlier backers. The pyramid collapses when the supply of potential
investors dwindles.
Fast loans are the next step of identity fraud. With the rise of taking loans online or by a telephone line, the number of these
frauds are increasing exponentially. The way it works is when they have some of your personal information such as your ID
and/or address of living, they can use it to sign up for a loan that gets transferred to the fraudster’s bank account.
Fake giveaways (as well as fake prizes and lottery) are the simplest and the most widespread financial frauds of today’s world.
They use social media accounts that impersonate famous celebrity is doing a giveaway. They then redirect you to a website
that claims that you won some really expensive item and to claim it you need to enter your credit card number or your
personal information. You will never get your prize, of course.
Fake charities use the same techniques to steal your money that legitimate celebrities use to raise funds. Before you donate,
make sure you know where your money is going.
Even though financial fraud is more direct than identity fraud since they just take your money, however the latter can be much
more dangerous than the former because some stolen information can’t be changed easily and can be used for all purposes for
the rest of the victim’s life. Identity fraud, most commonly occurs by telling you that you have won something, or have some
shipment in customs, but needs your credit card information and/or your other personal information to ship it to you.
Identity fraud mostly appear as:
Phising (and spear phising)
Fake giveaways
Phising attacks are the most common social engineering attacks. They create a website that looks like the legitimate one,
however they require you to “log in” to such site even if you’re already logged in. It’s usually used to get emails, passwords and
other personal information that can be used for other frauds mentioned here. Spear phishing is the same as normal Phishing
attacks, however they require some personal information that is used to make the victim more trustworthy that this isn’t a
fraud. In the later stages of these attacks the victim gives more personal information that the fraudsters didn’t have.
The best way to protect yourself is to check where you leave your personal information. Is the website domain legitimate?
Does the email or the website have good grammar? Is it too good to be true? If any of these is ambiguous then you should
avoid it, even if it looks legitimate in every other way. Your personal information should be given only to credible websites who
are liable to protect your data. Better safe than sorry.
Insurance
As a young adult you can get life, injury or travel insurance. For other things such as car or house insurance, you can buy it only
if you own that. Also if you want to keep your money safe, a bank is a good place since they all require a bank insurance to
keep running. In case the bank have failed the bank insurance will pay out everything you have on your account with that bank.
However if you want to keep small, expensive items you can do that in your bank’s deposit vault. Since they are hard to get
inside your vault you can be assured that your valuables aren’t stolen.
