August 20, 2019 Last updated August 19th, 2019 104 Reads share

Top Financial Scam and What are Their Possible Remedies?

Top Financial ScamImage Credit: Deposit Photos

“The art is not in making the money, but in keeping it”

The swindlers and hackers are always ready to keep you away from your money, unfortunately. Their deceptive ways are always ready to trap you in their spam. This becomes a boundary-less threat to almost everyone, They reach you with a broad array of scenarios. Through phones, texts, social media networks, emails and by your front doors. To divide the attractive class for the Financial scammers according to age, the older people are getting more attracted to the scammers and a target for such scammers, because they have more money to invest and fewer trust issues and concerns. 

Top financial scams:

There are five top financial scams, elucidated as following,

  • Ponzi Scheme:

SEC ( Security and exchange commission) reported, 

“it’s an investment fraud that involves the payment of purported returns to Present investors  from funds contributed by new investors”

It plea the new investors to invest in the opportunities that are promising to generates high funds with little and no risk. Initially, new investors monies doled out to existing clients. Without failure, the initiator of the Ponzi scheme taped the money off to fund an extravagant lifestyle.

  • Affinity fraud:

It targets the defined “tribe” that has any kind of similarity with each other, whether it is religion, cultural background or of the same regional area. This is much effectively, relatively because people tend to trust their members of the community. This build-in level of trust helps to trap more members of the same community. A Financial scammer to get more perks pretended to be a member of that group. 

  • Misrepresentation Scam:

It is another way to dodge naive people, it includes document tampering, misrepresentation in the credentials. Financial advisor found it easy because there are not any specified fixed credentials and training required to get a license. Dozens of financial Scam designations present, public know less about designations,  requirements, ethics for any certification, so that is no more difficult for any scammer to fool any of his clients.

  • Unrealistic returns:

“If it’s too good to be real, it’s probably isn’t”

Trapping the customers on unbelievable returns from their investments is another trick. That’s a scammer policy of greed and dreams of easy money.

  • Churning:

Currently, many stockbrokers have been charged with this scam. As trends are changing, initially the stockbrokers were paid when any of their customers sell or buy a security, so they can be trans to make unnecessary stock trades. That involves the scammer makes rapid buy and sell trade. That can cause the customer in commission but usually to sub-optimal investment returns.

A legal framework that sets guidelines for the collection and processing of personal or confidential information of individuals who live in the European Union (EU), is known as GDPR. 

On the 25th of May 2018, EU General Data Protection Regulation (GDPR) entered into force. To ensure compliance with the new law, companies have spent billions of dollars since that time. To comply with the strict requirements of GDPR, the top 500 companies of the U.S have spent $7.8 billion.

Many myths still surround the new EU law. Here we’ll discuss 5 myths and evaluate their realism.


The territoriality principle often applies to the field of law. For example, patent protection is provided by United States patent providers in the U.S. only. In order to ensure that the personal data of EU residents will not be used by illicit foreign companies, the authors of GDPR took a different approach. However, for customer due diligence process, GDPR applies to both, EU and non-EU companies if:

1- The organization has branches in EU and includes data processing.

2- An organization is providing goods or services to EU residents.

3- Third and most important is, if a company is monitoring the behavior of EU residents.

More than 1.5 billion websites are on the World Wide Web. Many of those websites fall within the scope of GDPR as they interact with EU residents. Many websites don’t comply with the requirements of GDPR due to the less human and financial resource. But Eu believes in “Ignorance of the law is not an excuse.” A fine of 50 million euro was imposed on Google by the French Data Protection Authority for violating GDPR in Jan 2019.

More and more data protection authorities are imposing hefty fines on privacy violators, despite the fact that the GDPR has recently entered into force. Germany sanctioned a social media company with a fine of 2 million euros for infringing GDPR.

Numerous websites are offering “GDPR-compliant” templates of the privacy policy. According to the need of a business, various other websites even allow their users to customize privacy policy. But drafting a privacy policy is a small step for an organization to become GDPR compliant. There are many other steps, some of them include:

  • Conduct data mapping.
  • In the case of a data breach, a system must be capable of generating alerts for relevant data protection authorities.
  • Appointing a data protection officer to keep check and balance.
  • Installing a cookie pop-up banner.
  • Ensuring data protection in non-EU countries and check that data processors have adequate levels of data protection.

If your organization is dealing with European residents, either you are providing services or selling products, your business must be GDPR compliant. Ignoring GDPR will result in bearing hefty fines and for small businesses, these fines could be devastating. Implementing a well-written privacy policy is a good step but update your privacy policy on a regular basis to reflect the latest changes in the data protection.

Remedies:

Identity theft, online scams, identity breaches, data tempering becomes a rising trend, a destructive flood of scam or fraud sweeps the nation, leaving unavoidable victims in this wake. A fallacious use of technology provides con artists an edge.

Presently Anti-Money Laundering laws are unable to provide a secure environment for online transaction and online business payments. To subtract or minimize the friction in online business can be made possible through a proper channelized and updated AML screening system that can help in identifying the identity of a customer, AML compliance provides real-time results to avoid or eliminate identity fraud.

Financial Scam – Deposit Photos

Amelia Matters

Amelia Matters

Amelia A senior content marketing associate at Shufti Pro, Amelia has been involved in digital marketing of this AI-based identity verification product. Amelia believes that it is imperative that online businesses start adopting KYC & AML practices to avoid financial risks and build trust with their online customers. She has written on diverse topics ranging from Fintech to IT Support services and from big data to agile technologies for businesses.

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