Personal Finance Knowledge Hub

How to Protect Yourself From Online Fraud: 14 Tips you Need to Read

We are living in a difficult time. It’s also a time when fraudsters see opportunity. With so many people at home and spending more time online, the chance to run scams is almost irresistible to some dishonest people.

Online fraud is a complicated picture; there are 8 common types which we’ll run through now to give you the ammunition you need to fight off fraudsters.

The 8 most common kinds of online fraud

The first kind of fraud is one you’ve probably heard of -- identity theft. This is where a fraudster uses malware-software designed to exploit you or computer intrusion methods to get hold of personally identifiable information about you such as credit card numbers, National Insurance numbers, passwords, and answers to security questions.

Credit card fraud will also be a familiar worry. As the name suggests, this is where you are duped into submitting your credit card details into a website built with malicious intent, or where you hand over your card details via a live chat, phone call, or email. Criminals often also buy things using card numbers contained in large stolen data files which can be purchased online.

Auction frauds are a kind of online shopping scam where buyers are lured in with the promise of getting something amazing for a far lower price than usual. As you might expect, they don’t receive the item they believe they’ve paid for or are sent goods that are worth far less than the products they were promised.

Investment fraud is again a ‘does what it says on the tin’ type of fraud. In this situation, fraudsters pretend to be really well-connected investment brokers who can help you earn massive money by trading stocks or other financial instruments. They don’t and you won’t make money. You’ll simply lose it all.

Work-at-Home frauds are becoming particularly prevalent in the time of the pandemic. They promise to give you financial independence doing some really easy work from home. But! There’s a registration fee you must pay before you can join this wonderful scheme. You’ll either get sent products that won’t sell at all or simply receive nothing.

Sweepstake/Lottery frauds see you receiving an email from someone who says you have won a lottery or sweepstake with a huge prize, but for complicated reasons, they need you to pay a registration fee, money-handling fee, transfer fee, or some other kind of invented cost. You won’t get the winnings and you will struggle to get that ‘fee’ back too.

Catfishing/online dating fraud is where someone pretends to be someone they are not -- a charming and sexy suitor -- who flatters you at first, but soon has lots of problems that need money to fix. Exploiting loneliness and a desire for love, catfishing is booming during isolation.

Location based scams are common. You'll receive an email or other kind of message from someone asking you to help them get a large sum of money to/from a particular country. The fraudster promises you a cut but expects you to send ‘an advanced fee’ before they can start the process. And, you guessed it, the ‘advanced fee’ is gone and the money never arrives.

Six ways to protect yourself from online fraud

So, what can you do to protect yourself? Here are some easy things you can do right now:

1. Be aware of what the common scams are

Brilliant news! You just did this by reading the start of this article. Also, keep vigilant when you’re reading newspapers or watching the news. New frauds and scams are often reported and keeping yourself informed will help you to avoid becoming a victim.

2. Your personal information should be… personal and confidential

Don’t give out your personal information on the phone, via email, or in any form of internet chat. You should initiate contact with banks or other finance companies you deal with. Don’t keep your credit card details in unencrypted email accounts, and don’t write passwords in plain text in a file on your computer or phone. Consider using a password manager. There are lots of options to choose from and they’re easy to set up.

3. Change passwords and PINs twice a year

Simply that. Change your passwords and PINs at least twice a year. And sign up for Have I Been Pwned, a free service that alerts you if any of your online accounts could have been compromised.

4. Get your credit report

Checking your bank statements each month is wise, but go further and order your credit reports. They’ll help to highlight if anyone has been using your identity to spend money in ways that don’t show up on your regular statements.

5. Shred old documents

Once you have no use for a document with your personal details on it anymore -- shred it. If you’re self-employed, remember that you need to retain information about your income for at least 5 years after each tax return.

6. Keep an eye out for odd transactions

Set up all the optional security measures on business bank accounts and personal current account. Two-factor authentication and text message alerts about unusual transactions can be massively useful in protecting yourself from fraud.

While fraud is common, you can protect yourself effectively. Don’t be worried, be vigilant.

Written by Mic Wright

    Published on 13-07-2020

Mic Wright is a freelance writer with a focus on technology, politics and popular culture. His work has appeared in publications including Times Money, GQ, and the New Statesman.

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