Can Digital Financial Literacy Ensure Protection Against Online Fraud?

The importance of digital financial literacy has increased significantly with improvements in technology. The digital revolution in banking and finance has greatly improved the delivery of financial services to the end consumer. However, it has also enabled scamsters to devise newer methods to steal your hard-earned money. 
Traditionally, digital financial literacy was restricted to understanding skills like budgeting, investing, savings, etc. However, with the rapid growth in the usage of the Internet and mobile banking systems for financial transactions, the scope of this field has expanded to include a newer dimension: safeguarding yourself from digital financial frauds and scams.

Read on to learn more about how digital financial literacy can ensure better protection against online scams:

Role of Digital Financial Literacy in Preventing Online Frauds

Digital Financial Literacy can protect you against online fraud in the following ways:

1.    Helps You Identify Scams
One of the main benefits of digital financial literacy is that it enables you to identify and protect yourself from online scams. Fraudulent activities like identity theft, phishing, tech support scams, fake investment schemes, etc., are on the rise. Improving your financial knowledge enhances your capability of being aware of such scams and helps you safeguard your finances.

2.    Assists You in Escaping Fraudulent Lenders 
Many fake lenders claim to offer loans with very low interest rates, zero credit checks and instant loan approval to lure in more customers. However, they demand a high upfront fee or advance payment to process your loan application. Legitimate and trustworthy financial institutions do not charge any advance fee to approve your loan application. Being aware of such practices will help you detect such fraudulent lenders and enable you to escape fake loan scams.

3.    Helps You Adopt Cybersecurity Measures
Digital financial literacy can help you learn more about the online security measures you can implement to protect yourself from fraudsters. These include using strong and unique passwords, updating your device’s software frequently, enabling multi-factor authentication, not sharing your personal information online, etc. 
Using cybersecurity measures for your smartphone, computer or other devices can help you secure your bank, loan or investment accounts from malicious fraud attempts. 

ALSO READ :- Top 9 Cyber Security Tips for Online Shopping

4.    Empowers and Encourages You to Report Financial Fraud 
Digital Financial literacy enables you to identify any suspicious loan or investment offer and report it immediately to the relevant authorities to prevent fraudsters from duping others. You can report any such financial fraud to your bank, law enforcement agencies or dedicated financial institutions. Knowing where to report such crimes ensures that you take the necessary action and protect others from falling prey to such financial scams. 

5.    Prevents You from Losing Money in Fraudulent Investments
Many fraudsters set up phoney investment agencies and offer get-rich-quick schemes with higher-than-usual returns. They may also pose as telemarketers or financial advisors to give you fake information about real investment opportunities. The scammers also encourage you to invest in these opportunities from their online platforms to defraud you. There is a higher chance that you may lose your money with little or no chance of recovering your deposits. Therefore, financial awareness can help you identify such schemes before it is too late.

6.    Protects You from Potential Future Scams
Digital Financial literacy helps you stay informed about the latest online frauds. It also enables you to learn more about emerging financial threats. Constant technological improvement will help fraudsters devise newer methods to steal your money. 

Following news alerts from government agencies, financial institutions and news portals can help you learn more about potential fraud risks you may face in the future. This will allow you to exercise greater caution while conducting financial transactions, preventing you and your family/friends from becoming victims of digital fraud.

To Conclude

While the evolving financial landscape has enabled you to avail of financial services with just a few clicks, it has also increased the risk of getting tricked by digital scamsters. In such a scenario, the scope of digital financial literacy has gone beyond managing your money to include measures to safeguard your finances from online fraud. Learning more about the common fraud schemes, exercising caution while choosing loan or investment schemes, reporting online frauds, ensuring higher cybersecurity measures for your devices and continuously educating yourself about digital scams can help secure your finances in the long run.

 

Disclaimer

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