What is Online Banking Fraud?

The introduction and further sophistication of online banking services have made our lives easier, faster, and more convenient. Everything from creating a bank account to bill payments and instant transactions can process through a single touch at our comfort. We no longer have to be physically present to carry out our banking activities or transactions. 

Unfortunately, these highly advanced banking systems are still not immune to online fraud. The convenience of online banking can sometimes sign up to the risk of hackers and fraudsters illegally penetrating your accounts and gaining access to your money. 

However, this is almost preventable by taking some simple measures and being completely aware of the possible threats to online banking, their consequences, prevention, and actions to take if you fall victim to such fraud. 

Online banking fraud can happen in many ways. Hackers often innovate methods to sneak into your system. 

The Most Common Types of Online Banking Fraud

Let's discuss some common types of banking fraud you might encounter if you are not concerned about security. However, these frauds are avoidable with the proper settings on your device.

Phishing

Phishing is a notorious technique that hackers and fraudsters use to access your personal banking information. Phishing is extremely sensitive and is the most prevalent among these types of fraud. 

Phishing triggers by sending users communications like emails or other forms of instant messaging service. These communications appear as genuine as your financial organization (bank) sent them. 

Phishing usually includes emails about account closures, offers available, update requests, an invitation to be a part of any new services of the bank, credit card offers, or antivirus links and information.

Call to action lure users to enter their banking details, including PINs, when they visit these links. 

From here, the fraudsters who have now gained access to your sensitive bank details tend to misuse them to access your money. 

Pharming

Pharming is yet another form of fraud associated with online banking.

Here the hackers use codes of your personal computers or other systems to get the dirty job done. It causes your host files to malfunction and automatically redirects you to fake websites.

These websites are often carefully designed to replicate the original ones. 

The most significant danger is that this can be highly undetectable in such a case. Your hijacked system will navigate you to fake websites even if you type in the correct URL. 

Evil minds behind the screen persuade users to type in their banking details on these websites, which the hackers misuse for illegal gains. 

Bill-payment frauds

Bill payment frauds are also prevalent. These are false and illegal transactions that enable users to initiate for manipulative billing purposes. Here too, the user is navigated to fake websites, where users get influenced to submit their account details which they misuse to transact the money into the account of these fraudsters. 

Malware

A malware attack is a typical cyberattack where malware renders unlawful actions on the victim's devices. Malicious software, also known as viruses, can encompass many similar attacks, including ransomware, spyware, command control, etc.

Spoofing

Spoofing is one such fruad that cybersecurity mechanisms find it challenging to tackle as it has more to do with humans. The attack starts when someone pretends to be some authoritative or credible figure to win the trust. Once they earn your confidence to invade your system information, and other financial gains, even spreading malware. Spoofing comes in any form, such as Email, Caller ID, Website or URLs, GPS, Messages, browser extensions, Computer IP, etc.

Smishing

Smishing is another type of phishing where attackers use a mobile phone as a platform. The criminals perform the attack with motives to steal your personal information, comprising social insurance, debit or credit card numbers. Smishing is planned through text SMS termed “SMiShing.”

Other modes of fraud include phone calls that pretend to be from financial institutions asking for verification details of your account, including OTP. People often fall for such traps due to a lack of digital awareness. 

Safety Tips to Prevent Online Banking From Frauds

Now you are aware of all the red flags in online banking, here are some precautions you should take while engaging in net banking transactions. 

Install Only Genuine Antivirus Softwares

Unauthorized and unsafe software makes your personal computer extremely vulnerable to corruption. Genuine antivirus software can protect you from phishing, malware, and other possible sources of threats to your security.

Stay Away From Public Wi-fi Or Use A Vpn

Open Wi-Fi is extremely risky. It's like an open invitation for hackers to interfere in your network and penetrate the system to access all your data. Open Wi-Fi allows hackers to inject malware into your system. Especially in banking activities such as money transactions and bill payments must never be carried out on an unsecured network. Using a VPN network can increase safety by preventing hackers from getting in the middle of your system and the network.

Avoid Emails That Navigate You To Banking Websites

Always access the banking pages directly through a trusted browser like chrome without any middle-party links navigating you. Avoid the emails that redirect you to your banking webpage through links and then require you to access your account. These emails could navigate you to a scam replica of the original website to lynch your banking details.

Always Check For Webpage Security

The URL of the website begins with an "HTTP." However, you will see that the URL starts with "HTTPS" through secured networks. This ensures that all the engagement between you and the webpage is secured, that all communications are end-to-end encrypted, and no third party can access the line. 

Do Not Reveal Your Personal Banking Details Through A Call Or Any Form Of Virtual Communication-

The banks will never call you asking for your banking details like your PIN or any OTP sent to your mobile number or email for any purposes. If you ever attend a call asking for this sensitive information, be assured that it is a scammer hunting their next prey for banking fraud.

Inform Your Bank In Any Case Of Fraud Suspicion

If you receive such a call or notice any transaction from your account that was not carried out by you, immediately inform your bank authorities. It does not matter how small the amount is. Once they invade your privacy, the risks are not limited to current loss.

These are some things that you (a user) must never forget while using internet banking to ensure that you have optimum security over your banking activities. Despite its high risk of fraud and scams, online banking can be a safe experience with some smartness. In case of fraud suspicions, immediately inform your banks and register a legal complaint about the crime for further reference.

Author Bio: Adv. Paromita Majumdar, Advocate on Record at the Supreme Court of India, brings over 12 years of experience with a legal career spanning over a decade, primarily focused on Litigation and Dispute Resolution. She is a first-generation lawyer and has practiced in the highest courts of India, her legal prowess extends throughout the courts and tribunals of Delhi NCR, where she has consistently secured favorable judgments in a diverse array of cases. She has successfully represented both private and public sector enterprises at various judicial and quasi-judicial forums in India. Before starting the law office, Paromita worked closely with some of the top lawyers and law firms in Delhi.

Her areas of expertise include matters related to:

- Quashing petitions under Section 482 CrPC, 

- Writ Petitions, 

- Insolvency and Bankruptcy, 

- SARFAESI Act, 

- Banking and Insurance laws, 

- Civil and Commercial Suits for Recovery, 

- Cheque Bounce Cases, 

- Consumer Laws, 

- Trademark Infringement, 

- Contractual Disputes, 

- Dispute Resolution and more.