The financial system is evolving and the way to defraud consumers is too!
Traditional ways of paying for goods and services like cheque books are becoming extinct and using cash is not necessarily the quickest and easiest way to buy things anymore. Paying for your groceries with a simple tap of your card, loading pre-paid cards to allow you to exchange currency on your holidays and sending money to friends or paying household bills via a mobile phone or tablet have become the norm. You can now even cash a check easily with check cashing apps.
This new wave of mobile banking and potentially unfamiliar digital ways of obtaining financial services and products, provides an opportunity for fraudsters to trick and prey on consumers with limited understanding of how certain products work and items can be purchased.
The first point of entry for fraudsters is to gather consumers’ personal information in order to gain access to their money. Examples of fraudsters’ tactics include: Identity theft to open new accounts, accessing personal details over the phone, and persuading consumers to invest in or buy an attractive product, which in fact does not exist or is too good to be true.
Regardless of what tricks are used to defraud a consumer, whether its phishing, Ponzi schemes or boiler room frauds, the common denominator is that they are all sophisticated. Scams which capture attention often look realistic and are professionally presented. Information leaflets and websites are created to look legitimate, sometimes using names that may sound like a legitimate and trustworthy financial services company.
To avoid becoming a victim of fraud it is important to be able to make an informed decision about a financial service or product before its purchase. Key points to consider are:
Knowing the financial services provider – is the firm regulated?
Research the investment, the individual and the firm selling it. Financial services providers that operate in Gibraltar will be listed on the GFSC website register. Always check whether the firm is authorised or permitted to provide the financial services it is offering by checking the relevant regulators’ (i.e. where the firm is established) website.
Check whether any warnings or alerts have been issued about the firm.
The GFSC publishes a list of warnings which include companies that the public should not purchase financial services/products from.
Treat any correspondence or call that requests private information with caution.
Do not provide or send any personal information without knowing the firm or person contacting you. Do not open any links in email addresses that you do not recognise.
Does it promise too much or sound too good to be true? – If it does, it generally is!
The degree of risk is reflected in the rate of return you can expect to receive. If an investment promises high returns, then the risk of losing your money is also high. This can even result in complete loss of money invested.
Does the product make sense to you?
Ask questions and take time to think about what is being offered. If it doesn’t make sense, ask for further explanations/details of the product, as well as the firm’s regulatory status.
The product must seem right and an understanding must exist of what is being bought. It is important not to succumb to pressures of sending money straightaway on the threat of missing out on an opportunity.
Protect yourself online.
Do not use social media to obtain financial services or provide personal information, bank details or other sensitive financial information.
Use privacy settings and understand how these work – i.e. what people can see.
The Gibraltar Financial Services Commission is responsible for ensuring both consumers and Gibraltar’s reputation are protected. This is why financial education is important as it encourages and enables consumers to understand key principles about financial services and products, whilst financial literacy is increased. This knowledge provides consumers with the skills and confidence needed to make informed and effective decisions about their money. It protects them from being a target of fraud.
Be vigilant and keep safe.
The GFSC website provides further consumer information on how to protect yourself against fraud: http://www.fsc.gi/consumer-guides/fraud
BY SUSAN HARLAND