What Is Fraud: Types Of Financial Fraud In The UAE

  • September 26, 2021

If you deal with receiving and transferring money, you may worry about the possibility of fraud. You may worry that someone will deceive you and use your money for unethical or illegal acts. Such concerns are valid, and you should educate yourself about the different types of fraud so as to protect your money and assets. 

Fraud may include embezzlement, identity theft, tax evasion, and money laundering. What distinguishes fraud from other types of theft is that people who commit fraud often have some kind of position, power, or opportunity. This allows them to deceive people.

Here, we will talk about what fraud is, the types of financial and online fraud, financial fraud in the UAE, and how you can safely transfer and receive money.

What Is Fraud?

Fraud involves an action or a misrepresentation of a fact done to deceive someone so that the individual committing the act may gain some sort of benefit at the expense of others. 

Tactics people committing fraud may use include hiding crucial information, lying to the victim, fabricating important documents, using deception, or making untrue suggestions.

A person who commits fraud often deprives the victim of some sort of benefit they previously had. This may include money, position, or power. For a person committing fraud to succeed, they need to know something you don’t. This piece of information is what allows them to deceive you.

Fraud prevention and verifying important documents can prove costly. The perpetrator knows this and takes advantage of it. 

There are several laws in place regarding fraud. However, it is not likely that all cases of fraud will go to court or receive a criminal trial. If taken to court, though, a fraudulent person may go to jail.

Types of Financial Fraud

Some types of financial fraud are bribery, embezzlement, and securities fraud. Here, we will talk about the different types of financial fraud.

  1. Identity Theft

Identity theft includes a person using another individual’s personal information to access their funds, make transactions, or use credit cards. Information a person committing identity theft may use include:

  • Social security number
  • Bank account number
  • Credit card information

The perpetrator gets this information through data mining, which includes using raw information to draw patterns or get data. The thief then uses this information to commit some illegal acts or crimes such as credit card fraud.

  1. Mortgage Fraud

Mortgage fraud includes misrepresenting mortgage documents to defraud homeowners and other parties. It is mostly real estate professionals who commit mortgage fraud since they can use their reputation and knowledge to their advantage.

The FBI’s Financial Institution Fraud Unit said that perpetrators often target distressed homeowners and defraud them. Some types of mortgage fraud are:

  • Equity skimming
  • Loan modification schemes
  • Foreclosure rescue schemes

You should learn to recognize the common signs of mortgage fraud. According to the National Crime Prevention Council, signs of mortgage fraud are:

  • Requests for advance payments
  • A slow process of buying your home
  • Unanswered or partly answered questions
  • Requests to stop making mortgage payments
  • Requests not to contact your mortgage servicer
  • Requests to make payments to someone who isn’t your servicer
  • Promises of loan modification
  • Foreclosure wasn’t granted
  • Requests to sign papers without actually reading or understanding them

According to the FBI, you need to protect yourself by looking for referrals before agreeing on a deal. You should also avoid making a deal with someone who contacts you without you asking. You should always check the qualifications and licenses of the people you work with. 

Try to seek advice and do not sign papers you do not understand. If a deal seems too good, it probably isn’t real.

  1. Mass Marketing Fraud

Mass marketing fraud involves constant messages, calls, or emails regarding lotteries, cash rewards, or prizes. These prizes are often false, and perpetrators offer them in exchange for fees or donations. 

In mass marketing fraud, a person tricks another into sending money in advance, offering them a prize in return. The individual never gets said prize. 

At times, a scheme may fake association with the U.S Mail. In such cases, the thief uses the U.S Mail to expand the fraud scheme. 

In some cases, the person may end up stealing your personal or financial information.

  1. Credit and Debit Card Fraud

Credit and debit card fraud involves someone gaining access to your card details or managing to steal your card and make purchases with it. They may arrange withdrawals, make unlawful purchases, or commit some other illegal act.

You should always check your bank statements and keep a lookout for transactions you did not make. Even if you see small charges, it could mean that the perpetrator is testing your card. Credit and debit card fraud may happen when you don’t recognize the institution or individual to whom the money got sent.

Credit and debit card fraud may even occur through phone calls asking for your card information. 

Types of Online Fraud

Online fraud is a very common form of fraud. You rarely know who the person you are dealing with is. Here are some forms of online fraud you should look out for.

  1. Phishing

Phishing, also known as an email scam, is a scheme through which you get emails that lure you to a website. You are often asked to disclose personal details which the perpetrator uses for illegal acts.

The dangerous thing about phishing is that the email will appear to come from a reputable organization or service. This may include a regulatory website.

Such emails often have warnings or urgent notices such as “immediate action needed!” They may tell you about threats to your information or the risk of your bank account shutting down. The email will then ask you to send your personal information as a way to “fix” this problem.

When the email directs you to a website, that site will also look exactly like that of a reputable institution. If you don’t pay attention, you will end up entering your personal information for the perpetrator to use.

  1. Vishing

In vishing, instead of a fraudulent email with a link, you will get a fraudulent email with a phone number. On calling, you will hear an automated message that will ask for your personal information.

Never call such numbers or give them your personal information. If you truly want to contact a company, take the phone numbers from their website.

  1. Malware

Malware is malicious software that, when it enters your computer, attacks your online security. Such attacks can even enter into the systems of big organizations. When malware gets installed in your system, it enslaves your system as part of a botnet – a network of robot computers.

The malware allows the bots to get past even the most stringent security measures and access your financial or personal data. They can get your IDs and passwords, your bank account details, and your Social Security numbers by tracking your keyboard strokes.

  1. Hijacking

In hijacking, the perpetrator takes charge of your online communication. They pose as you and then conduct illegal acts or access your personal information. They can access money and withdraw or move it.

Financial Fraud in the UAE

The Abu Dhabi police, aiming to speed up the response to financial crimes and fraudulent acts, established the Criminal Investigations Directorate. The directorate communicates with local banks on a regular basis. 

In 2020, 142 people from 13 gangs were arrested in Abu Dhabi. These individuals fraudulently obtained the bank details of several people and used them to commit illegal acts. 

Some well-known financial crimes in the UAE are:

  • The Fake UAE Central Bank Call
  • The Simple SIM Swap
  • The Covid-19 Cure Investment Con
  • The Dubai Coin Dodge
  • The Emirates Post Email Trap

How to Send Money Securely through payit

Sending money through digital wallets is often a good idea since they store all of your information in one place. You only need to use the wallet PIN for transactions which protects your bank details and card information.

payit is the best mobile wallet for such transactions. It is very secure and will protect you from financial fraud.

Final Words

Fraud involves deception through misrepresentation or omission of crucial information. The perpetrator often knows something you don’t, which allows them to deceive you. 

Forms of financial fraud involve credit and debit card fraud, identity theft, and mass marketing fraud. Forms of online fraud involve phishing, vishing, and malware.

You should always double-check documents, look for references, and notice red flags when making a deal with someone. In the case of online acts, you should never give your personal information in response to unsolicited requests or warnings.