Ponzi traps & identity thefts

Don’t put you money in schemes which are unregulated and function outside the formal financial system
Ponzi traps & identity thefts

Just a few days back, experts at the Centre for Counter FraudStudies at the University of Portsmouth, United Kingdom, have warned that withthe coronavirus induced economic crisis deepening, highest levels of fraud andcybercrime have become inevitable. There are also concerns that existingpreventative measures are not getting sufficient attention to deal with theheightened threats of Ponzi traps and identity thefts that come from a deeprecession knocking at our doors.

Generally, financial frauds become order of the day whenthere is downturn in economy as it puts pressure on peoples' incomes. It's herefraudsters leverage the depressing situation to their advantage and lure peoplethrough fraudulent financial benefit schemes.

Notably, very recently these unidentified fraudsters lost notime when the Reserve Bank of India (RBI) announced three months moratorium onequated monthly installments (EMIs). They resorted to identity theft of bankcustomers using OTP pretext to make customer respond with their accountdetails.

Another fraudulent digital income scheme is fast runningacross world wide web luring people to earn without investing a penny!   The only investment one has to make is toget minimum two people on board in the chain – the origin of which is unknown.The design of the scheme is nothing but a Ponzi trap. Here in J&K thisdigital income scheme is fast building chain of gullible people with an aim toearn income without investing a penny!

So, in the context of warning flashed by the University ofPortsmouth, let's understand the modus operandi of Ponzi schemes and identitythefts which trap gullible investors and steal their hard earned money.

What is identity theft?

Identity theft is a clandestine activity in which afraudster acquires key information such as name, date of birth, social securitynumber, PINs, mother's maiden name, etc., of a person to commit fraud. Thestealing of this kind of information can help a criminal impersonate anotherindividual. Once this information is obtained, it becomes easy for a criminalto misuse it by leveraging technology and commit frauds like accessing bankaccounts, obtaining loans, making purchases, etc. At the moment identity theftis epidemic in nature and is the fastest growing digital crime facing people.

What is a Ponzi Scheme?

To understand the modus operandi of a Ponzi Scheme, askyourself a simple question: Is somebody promising you extraordinary returns onyour investment in a scheme which is outside the formal financial system? Ifso, beware! It could be a Ponzi trap.

Let me explain. A Ponzi scheme is a fraudulent investingscam promising high rates of return at little to no risk to investors. Thescheme generates returns for early investors by acquiring new investors. Theseschemes usually collapse on themselves when the chain of investors breaks and newinvestments stop.

The scheme was orchestrated first time in 1919. The conceptof the Ponzi scheme did not end in 1920. With the advent of technology, theconcept of Ponzi scheme, named after a swindler Charles Ponzi, who orchestratedthe first one in 1919, also got transformed. Amid this severe public healthemergency, several online schemes have emerged as online scammers are on theoffensive, looking to exploit the fears of vulnerable Internet users anxiouslyfacing the coronavirus outbreak.

How these online scammers use to defraud people taking route of COVID-19 situation?

They are setting up websites, contacting people by phone andemail, and posting disinformation on social media platforms. Cybersecurityexperts tracking current digital threats have revealed that these scammers havedeveloped Apps designed to track the spread of COVID-19 to insert malware thatwill compromise users' devices and personal information. It masquerades ascoronavirus tracking App but in reality it locks you out of your phone anddemands a ransom to get back in. There could be a sophisticated phishingscam  where emails are pushed from theWorld Health Organization and offers helpful tips to avoid infection but, inreality, takes email users who click on the link to a site that steals theirpersonal information. Precisely, many of these scammers are trying to trick youinto divulging your personal information, which can be used against youelsewhere.

Make it a point not to respond any call posing from yourbank asking you for OTP, account details or any personal detail. No bank asksits customers about such kind of most personal information. Inform your bankimmediately when you receive such calls.

What should you do in such an ugly scenario?

The best way to avoid falling victim to what's now referredas COVID-19 scams is to keep guard against unknown senders, avoid clickingunknown links or opening unknown attachments. Be cautious while downloading anyApp.

As far as saving yourself from Ponzi traps is concerned, theresponsibility lies on your shoulders. We have seen most of the investors wanttheir money to grow in leaps and bounds in a short period of time. It's thisgreed and urge for easy money which makes people to fall for it. So don't begreedy. Before investing in a scheme, investors should ask questions about howthe scheme plans to generate high returns, and what's the underlying businessmodel.

Lastly, don't put you money in schemes which are unregulatedand function outside the formal financial system.

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