Building financial literacy: knowing and understanding the scams in the financial industry is an absolute necessity. It is important that you have a knowledge of the less ethical dealings in the finance sector to make an informed decision. It is the final entry in our series on financial literacy.
The Financial Literacy Foundation has found that although 85% of Australians are confident in their ability to seek financial information, only about 64% claim to understand financial language. The discrepancy in the understanding of this language is what allows predatory behaviours to develop. People most commonly victimised by scams do not completely understand the language of finance.
Banking and Credit Scams
Internet banking and ATMs have increased our exposure to banking and credit card fraud. This is mainly caused by making our personal information more accessible. One must be very careful when giving away account or credit card information in an online medium.
Banking scams can be divided into three broad categories:
Credit card scams: Generally, this occurs when someone has access your to your card details and can make purchases on your card. This can be achieved by:
- Tricking you into giving your card details over phone, text or email
- Stealing your physical card and using PayWave, PayPass or other contactless forms of purchase
- Installing spyware in your computers to remotely access information about your internet activities
- Using card skimming devices on ATMs and EFTPOS machines
- Accessing information on unsecured websites or shopping details
It is very important to be wary of giving out your card details. You should also always use secure websites to shop online. Always ensure you check your bank statements for any charges that do not make sense. Immediately report a stolen or lost card. Make sure you have anti-virus software on your computers and never use public devices to access your financial information and it is also a good idea to use a variety of strong passwords and to change them frequently.
Requests for account information (Phishing Scam): have you received an out-of-the-ordinary text, phone call or email requesting your account details? That is probably a phishing scam. Phishers claimed to be from your bank or a government agency. Then will generally use either of two approaches; too good to be true tactic where someone wins something such as a promotion or refund. Or alternatively, the opposite in which you receive a threatening message, specifically designed to pressure you panicking and giving up your personal details.
So keep in mind that financial institutions will never ask for your account details via email or text. They probably already have them. Make sure you only give out your details if you have called the financial institution. Otherwise, ensure that the website you are banking on is secure (the website will be preceded by https://).
Loan scams: This is one you hear about on current affairs programs every week. Unprincipled lenders will be very happy to offer you fake loans. These are denoted by requesting for upfront payments to personal or overseas bank accounts. They can also offer unrealistically low-interest rates or loan amounts higher than ordinary. Try using a web search to see if you can identify the language used in the loan ad that has been linked to other fraudulent activity.
ASIC MoneySmart website offers more information about banking, credit, phishing and loan scams.
Have you ever seen a video of someone purposefully throwing themselves in front of a moving vehicle? This is a pretty blatant attempt at insurance fraud. Unfortunately, it does not just happen on the road. Insurance fraudsters will often call to connect you with motor accident compensation claims. If someone does call you, make sure you find out exactly who the afflicted party is and where the call is coming from. Contact your insurer straight away – they may have dealt with this fraudster in the past.
You cannot access your superannuation fund before age 55, the law prohibits this but for very rare cases. If you receive an enticing offer claiming to let you access your super early, there is a good chance that it is a scam. Be aware of the age you are allowed to access your super. Anything that claims to give you an early benefit or pension should be met with the highest suspicion. You can risk losing all the money you have diligently saved over your working life by agreeing to a super scam. As we discussed earlier Superannuation is your nest egg and you need to build it and take care of it.
Identity theft is the stealing of someone’s personal information including name, date of birth, address and phone numbers. These details are used to apply for bank accounts, credit and fake passports. Identity thieves can even go so far as to use your identity in illegal money laundering schemes. It is important to protect your identity and to ensure nobody knows what you want to be kept secret.
As always the information provided on this page is general in nature and created as a starting point to build financial literacy, you should always see a financial advisor prior to making a financial decision.
ASIC provides a list of types of coming scams and where to report them. Use this as a resource if you feel you have been targeted. http://www.moneysmart.gov.au/scams/report-a-scam
Additionally, you can access information on different types of scams and how they work on the Australian Competition and Consumer Commission website https://www.scamwatch.gov.au
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