What is Identity Theft, and How Can You Protect Yourself from Financial Frauds?

Many businesses, including big corporates, are facing cyber threats like data breaches, identity theft, etc., which results in damaging the reputation of the firm and risking the data of customers and employees. As a matter of fact, with the higher use of digital platforms, the cybercrime rate has increased. In the year 2020, we had seen a steep rise of 11.8% in cyber-crime, whereas the rate of normal crimes decreased simultaneously due to the COVID-19 pandemic.

In light of these rising cybercrimes or digital frauds, this article explains what Identity Theft is, how it is being used to do the financial frauds, and how you can protect yourself from such frauds.

A couple of months back, there had been several reports of unaccounted app-based loans in the credit history that people claimed they never took or applied for. This is a case of a fintech company - Dhani Loans and Services. Fraudsters had used random people's PAN Card details to avail of instant loans from the Dhani App. Many of these loans were unpaid, resulting in victims getting notices from the lender and a negative impact on their credit score. This is an example of Identity Theft. Hundreds of people fell victim to PAN Card identity theft, including celebrities like Sunny Leone and journalist Aditya Kalra. However, this is not the only case. There have been several cases of identity theft in India.

What is Identity Theft?

Identity Theft is stealing someone's identity and wrongfully impersonating it for their own benefit. The theft could be of any personal information, such as name, date of birth, ID proof, address proof, bank details, credit card number, etc. The stealing and impersonating of identity is done for conducting illegal and fraudulent activities. For example, your credit card can be stolen and used to make purchases, your mobile number can be stolen and used to get OTPs for fraudulent or illegal transactions, etc.

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What are the tactics used by fraudsters to steal people's personal information?

Fraudsters use several tactics to steal people's sensitive information to commit frauds. Some of the common tactics are phishing, smishing, spoofing, and vishing.

What is Phishing?

Phishing is a type of social engineering in which a target is contacted by email, call or message purporting to be from a reputed company to trick the target into reviling sensitive information, such as credit card number, One-Time-Password (OTP), CVV (a three-digit number mentioned on the back of the credit/debit card, etc.). Phishing is often targeted at employees of the big organisations to obtain corporate data by sending emails from the email ids that are very similar to the company's email ids.

What is Smishing?

Smishing is a part of phishing. The term phishing is often used when the target is contacted by email. Whereas smishing is specifically used for social engineering in which the target is contacted by SMS.

What is Spoofing?

Email spoofing is a form of cyber attack where cyber-criminals trick users into thinking that the email has originated from a trusted source. In email spoofing, cyber-criminals mainly focus on forging the sender's address.

What is Vishing?

Vishing is a form of cybercrime in which the fraudsters use verbal communication like a phone call to steal the person's sensitive data. These fraudsters generally pretend to be calling from a bank or financial institution and make the target believe that providing the information is in their best interest.

How can you trace Identity Theft?

There are several ways to trace if you have been exposed to Identity Theft.

1. The Government has launched a portal under the Department of Telecommunication for fraud management and consumer protection. If you are suspicious, you can check on the portal whether there is any additional mobile number registered by your name. If you find any unauthorised number, you can send a request to the Department of Telecommunication to block the number.

2. To know if there are any unauthorised loans in your name and ensure they do not impact your credit score, it is advisable to check your credit score regularly. However, you should know that frequently checking your credit score can have a negative impact on it. Hence, it is better to check your credit score once or twice a year or whenever you apply for a new loan. If you find an unauthorised loan in your credit report, immediately inform the lender and credit bureau.

3. It is a good practice to review your bank and credit card statements every month. It not only helps in managing your finances better and controlling splurging, but it can also help you identify unauthorised transactions, which could be frauds done through identity theft.

4. Install a trusted antivirus and renew it timely. Furthermore, avoid online payments or logging into any accounts with passwords using public Wi-Fi or public computers. If you have to use public Wi-Fi or computers, use Virtual Private Network (VPN) for secured transactions. Besides, clear the browsing history every time you use a shared device.

What precautions should you take to avoid being the victim of Identity Theft?

1. Ensure your phone is locked when not in use:

Nowadays, most of us keep our personal information and digital copies of all our important documents saved on a device or on the cloud. Therefore, you should always keep your gadgets like phones and laptops locked when not in use. When they are locked and have strong passwords, there is less chance of any fraud misusing your personal data, even if your phone/laptop is lost/stolen.

2. Shred the unnecessary documents:

Many people keep unnecessary multiple copies of their identity proofs, address proofs, bank statements, passbooks, etc. and expired or unused debit cards and credit cards at home. If fraudsters get access to your personal documents, they can misuse them for their benefit. Hence, if these documents or cards are no more required, it is advisable to shred or discard them.

3. Be careful when providing the documents to authorities:

There would be multiple situations when the authorities or company representatives ask for your identity and address proofs for several reasons, like the opening of a bank account, reactivating the bank account, opting for a loan, buying a new SIM card, making a rent agreement, etc. You should be careful while providing your personal documents and ensure you are handing them over to the right person. Moreover, it is advisable to provide only the required documents and avoid giving unnecessary documents. Also, it would be better if you mention the reason for providing the document near self-attestation. For example, if you have provided the documents for opening of a savings bank account, mention it on the copy - to ABC Bank for account opening.

4. Do not share your PIN or Password with anyone:

If someone has access to your phone and knows your PIN, they can easily gain access to your personal and financial information. Therefore, you should not share your mobile password with anyone unless you absolutely trust them. Apart from this, having the same PINs and passwords for all your accounts is also dangerous. If someone gets to know the password of your one account, they will be able to access all your online accounts. Hence, it is advisable to keep different passwords and PINs for all your accounts. For example, your debit card or credit card PIN should be different from your UPI PIN. Similarly, your Instagram password should be different from your internet banking password.

5. Make sure you use only Authentic Apps:

Fraudsters create counterfeit banking and financial apps that look very similar to authentic apps. While downloading the app from the Play Store or App Store, you have to be very careful. Counterfeit apps can steal all your personal data not only from the app but also from the device. Once the fraudsters gain access to your sensitive data, they can transfer funds from your account, blackmail you, or use the data for any illegal purpose. Hence, it is not advisable to download any financial apps without verifying their authenticity.

6. Verify the UPI ID when transferring funds:

Every UPI user has a UPI ID that can be considered as their identity to transfer funds. If you are directly transferring funds to any UPI ID, you should double-check if you have entered the correct ID. Making a typo in UPI ID may result in a credit to the wrong account. Besides, scammers create fake UPI IDs, especially in the cases of donation IDs. These IDs look similar to the official UPI IDs but are actually frauds. When PM Cares Fund stated their UPI ID pmcares@sbi to make it easier for people to make donations, many scammers tried to take advantage of it. They generated several similar fake UPI IDs with SBI like pm.care@sbi, pmcarefund@sbi, etc.

7. Pay attention to Spam Warnings:

Most UPI apps try to identify fraudsters based on previous transactions. Whenever they send a request for money, the app sends a warning notification to the receiver of the request. If you receive such notification that implies that the request could be a scam, you have to be alert and verify if the request is from a genuine person. The scammers can also send phishing links to make payments through emails and SMSs.

8. Use the financial app carefully in public places:

You should be cautious when using financial apps in public places. It is not advisable to use the financial apps in crowded places as fraudsters can be present anywhere, or even normal people can take advantage if they get to know your sensitive information. This way of stealing sensitive information without obtaining the victim's attention is called Shoulder Surfing. Furthermore, using free Wi-Fi at public places like railway stations, cafes, etc., increases exposure to online scams.

9. Be careful when using Screen-sharing Apps:

It is also necessary to use the screen-sharing apps carefully and only when needed. These apps can have access to your sensitive data, which can be misused. If you have such apps on your phone, it is advisable to delete them if not required. However, if you need them, be careful when allowing data access at the time of setting them up.

10. Consider buying a Cyber Insurance Policy:

Cyber Insurance for individuals has now become essential for everyone who is digitally active. Cyber Insurance provides cover to mitigate losses from cyber incidents and theft of sensitive data. Traditional Cyber Insurance provides coverage to only businesses and key personnel of the corporates from internet-based risks, such as risks related to information technology infrastructure, data privacy, information governance liability, etc. In simple words, it covers the business losses due to data destruction, theft, hacking, extortion, etc. Click here to read more about cyber insurance.

To Conclude:

The internet is supposed to be making your life easier and more fun. However, considering the rise in the number of cyber-attacks and crimes, our responsibility to protect ourselves from Identity Theft and other cybercrimes have increased. Make sure you take the necessary precautions to avoid getting scammed.

Warm Regards,
Ketki Jadhav
Content Writer