On a regular basis we keep hearing of these scams and frauds, be is banking or crypto these are becoming very common. Some time back I heard that in India there is a message going out to people saying they have received some funds in error in to their account and to return them back, the back details are sent along with the message. The funds are actually getting transferred to people's accounts, when they return the amount back on the given bank details, seems like their accounts get hacked and their own funds go away. These are some scary things. Because it's difficult to identify what is genuine and what is not. Especially for the senior citizens who are not tech savvy and who do not understand these frauds much, they easily become target of these types of frauds. In an ideal situation the person who receives such message should contact their bank immediately and notify them about the transaction and then let the bank do the needful from their side.
While these scams and frauds keep going on from people, there are scams that these institutions themselves also do. Many banks in India have also been involved in scams by making financial misrepresentations and deceiving the public and the larger governing bodies. People have lost their money with banks and financial institutions also. There is no 100% guarantee today as to which bank is safe. Common man's trust is broken by these institutions who claim that they are safe and secured.
The internal governance of any of these systems is difficult to catch hold of. We will never know what's happening in the inside so one cannot check that and then take a decision hence one has to look at the other governance measures that these institutions follow which are visible and transparent.
Personally I would look at these to decide if I want to go ahead with it or not.
- Reputation - The most important I believe, the better the reputation the more reliability.
- Transparency - This again plays an important role. When there is transparency and you have idea about what's happening in the inside somewhere you can build a trust factor. Like regular audit reports being published to the people invested in them. When clear risk factors are mentioned associated customer responsibilities are defined then this helps one make an informed decision.
- Their fraud risk assessment measures - How does the institution deal with frauds, what are the frauds risk assessments that they carry out makes the place safer, may be not 100% but still reliable.
- Maintaining customer confidentiality - These days data is the most valuable thing and big corporations would want to pay anything to obtain customer data. Can I trust the institution of they not sharing my personal information to any other party? This is relevant to me.
In India around 2 years back, there was allegation on Whatsapp that they were divulging information, and people were losing faith on using Whatsapp. This is when Telegram became famous. Since then in Mumbai city I have been seeing these Whatsapp advertisement banners clarifying how they are securing the data. They keep advertising about end to end encryption and privacy.
This is what happens, when people lose trust, it is hard to get back to it. - Grievance addressal system - I will take a look at it by taking a look at their social media accounts. This is one good thing about social media that you can get whatever information you want. When there are strong systems in the organization as a customer I would feel secured that by any chance if something wrong takes place, it will be looked into and take care.
Though nothing can be 100% but then somewhere we have to narrow down and look out for our safety. With the amount of frauds that take place it's not very easy to trust. One should not get lured into anything that looks to good to be true. Like big instant returns, fast cash and profits. These things do not happen in the world. It is better to go with cautiousness and safety before investing in anything.
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The Prophet (peace be upon her)!
Crazy things are happening :-(
You're right. Most institutions can never be trusted 100%. Setting a criteria for choosing the best one(institution) is the only possible way out there. I think reputation and transparency is what most of them lack and any one who can do the two can make anyone a client.
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People need to develop a lot of trust before going ahead with them and with all the scams coming up they will have to work harder. But still there will be some who will be able to dupe.
Hello Naina ji
Absolutely true. There always be a risk factor in investment. Even regular institutions can't guarantee 100% security. As you mention we had example of such case in India. In case of crypto scenario is worse.
The points you mentioned for a better monetary system is a must.
Thanks for sharing your thought about the topic.
In India we have some or the other scam happening all the time. Thanx to our ever greedy politicians and to corporates who are never satisfied with how much ever they earn.
A very timely guide, necessary in the wake of the failure of several centralized institutions.
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