Financial Fraud: How to Avoid It
The term “financial fraud” refers to actions carried out with the intent to deceitfully acquire financial resources from individuals or organizations. These can take many forms and occur at different levels—ranging from individual scams to large-scale organized crimes.
Here are some of the main types of financial fraud:
1. Personal Fraud
Banking fraud – for example, stealing money using someone else’s card details.
Fake investment offers – promising high returns from fake or non-existent businesses.
Phishing attacks – deceiving people to obtain personal data (PINs, passwords, etc.).
2. Corporate Fraud
Falsifying financial reports – companies manipulate accounting data to inflate profits.
Non-disclosure of reports – hiding financial losses or debts.
3. Tax Evasion
For example, hiding income or using virtual companies to avoid paying taxes.
4. Ponzi and Other Fraudulent Schemes
A classic example is the Ponzi scheme, where earlier investors are paid with the funds of new ones, until the system eventually collapses.
5. Money Laundering
Illegally obtained money is disguised as coming from legitimate sources.
How to Protect Yourself
Verify the source of financial offers.
Don’t share personal or banking information.
Stay updated on financial awareness news.
Seek legal or financial advice when in doubt.
How to Avoid Financial Fraud?
Avoiding financial fraud requires vigilance, awareness, and adherence to some basic safety rules. Here are some practical and proven steps that can help you or your organization avoid such risks:
1. Be skeptical of offers that seem too good to be true
If something sounds too good to be true (e.g., “secure investment with 30% monthly return”), it probably is a scam.
2. Verify the source
Search for information about the organization, platform, or individual offering services on official websites, search engines, and social networks.
Check if they are licensed or officially registered.
3. Never share personal or banking data
No one has the right to request your card PIN, passwords, or SMS codes.
Phishing websites may closely resemble real banking websites. Always verify the URL, SSL (https://), and that it’s the bank’s official domain.
4. Use two-factor authentication
Activate 2FA (two-factor authentication) wherever possible, especially for banking and email accounts, to enhance security.
5. Monitor your accounts
Check your bank accounts regularly for suspicious transactions.
Don’t ignore software and security updates.
6. Seek trusted financial advice
Before investing large sums or making business deals, consult a lawyer or financial advisor.
7. Educate yourself and your team
In organizations, provide employee training on financial and cyber security.
Hold workshops on identifying fraud schemes.
8. Report fraud attempts
In Armenia, you can contact:
The Police of the Republic of Armenia
Central Bank of Armenia
Investigative bodies
Cybersecurity centers (e.g., Ministry of Emergency Situations’ CERT-AM)