Why do people fall into traps of financial scammers and how to avoid it?

Financial fraud and forgery tend to occur faster and on a larger scale during economic and political crises. That is why we should be especially careful and vigilant during such times.

How and why do people fall victim to financial fraud? How to avoid it? Arman Tonikyan, Ph.D. in Economics, helped NEWS.am Tech to find this out.

What schemes of financial fraud are widespread in the world today?

A study conducted jointly by Cybersource, Merchant Risk Council and Verifi in North America, Latin America, Europe and Asia-Pacific region shows that phishing, card-to-card transfers and identity theft by hacking accounts on social platforms continue to be the most common types of financial fraud.

According to Arman Tonikyan, this year financial fraud with the help of phishing in Eurasia made up about 35%, and in Latin and North America, they are more common for online commercial card transactions.

Why do people fall into the financial fraud trap?

According to the expert, financial fraud and forgery usually occur on a faster and broader scale during economic and political crises. When there is chaos around, more people become interested in getting free goods or services on suspiciously attractive terms. However, we must not forget that free cheese, as they say, comes only in a mousetrap.

"It is important to note that people often become victims of financial fraud because of low financial literacy, improper use of payment cards, transferring card data to strangers, online trading on fake online sites, answering unknown emails and calls containing viruses, etc.

Scammers carefully study the level of technology development, financial literacy of the population and other conditions in the regions where they are going to carry out fake transactions and extort money. They spend both financial and time resources for that purpose," Tonikyan noted.

How are financial frauds prevented?

According to statistics, one in ten transactions in the world is carried out with a possible financial fraud scheme. In addition, one dollar of every tenth dollar earned by e-commerce is spent on preventing financial fraud.

"Today, 35-40% of the world's commercial transaction providers are protected against financial fraud by cardholder identification, telephone two-factor identification and 3D Secure security. These three main tools of financial fraud prevention are widespread in Armenia as well. Thanks to the use of security systems and different technologies, every year around half a million AMD is ‘saved’ from financial frauds in our country," the economist said.

How can you protect yourself from financial fraud?

The main protective actions, according to the expert, are related to the manifestation of competent financial behavior:

• Always follow the rules for making secure card transactions.
• Do not provide others with your personal information.
• Use only reliable and popular online trading platforms.
• Pay attention to the content of strange messages, consider the precedents of fraud.
• Do not be tempted by special offers, remember where the free cheese happens.
• When getting in touch with strangers, constantly use the possibility of connecting individual electronic accounts (e-mail, electronic courier applications, etc.) with each other and carry out security checks on each other.