From phishing to credit card fraud: 6 common types of fraud to beware of this holiday season
The end of the year is a time filled with excitement, celebration, and the joy of spending time with loved ones. But amidst the festive cheer, there’s a hidden danger: a surge in fraud and scams that could turn your holiday plans upside down.
As shopping activity increases, financial pressures mount, and the emotional rush of the season sets in, it creates the perfect storm for fraud perpetrator to strike. These threats don’t just target individuals – businesses are at risk too.
For over seven years, Integrity Today has been delivering valuable insights through our monthly articles to help guide our clients. This holiday season, we’re here to highlight six common types of fraud to be aware of, along with key preventive measures to keep you safe:
1. Phishing
Phishing is one of the most prevalent types of fraud, where cybercriminals send emails or messages that appear legitimate in an attempt to steal personal information. The holiday season, with its surge in online shopping, bookings, and travel plans, offers the perfect opportunity for phishing attacks.
These scams typically involve emails or messages with links leading to fake websites that mimic official ones. They often lure victims with tempting offers such as massive discounts or exclusive promotions. Once users click on these links, they are directed to fraudulent pages and prompted to enter sensitive information like names, addresses, and credit card details.
Prevention Tip: Always double-check the sender’s email address, avoid clicking on suspicious links, and ensure you only enter personal information on trusted, secure websites.
2. Business Email Compromise (BEC)
Business Email Compromise (BEC) is a type of fraud that primarily targets businesses. In this scam, cybercriminals impersonate company leaders, such as CEOs or other executives, by sending emails from addresses that closely resemble the official company domain, with only slight alterations.
These emails typically contain urgent requests, like instructions to transfer funds or share sensitive information. Fraudsters exploit the sense of urgency to pressure employees into acting quickly without verifying the legitimacy of the request.
The finance department is often the main target, especially during the holiday season when transactions rise and staff availability may be reduced due to vacations.
Prevention Tip: Always verify transfer requests through separate communication channels, such as reaching out to the executive directly via the company’s official phone number.
3. Payroll Fraud
Payroll fraud occurs when individuals manipulate the payroll system to receive unauthorized payments. During the holiday season, with increased employee leave and a rise in overtime or temporary workers, fraudsters seize the opportunity to add “ghost employees” to the payroll system. This is particularly common in labor-intensive industries, where headquarters are far from production sites, making oversight more challenging.
Another common tactic is employees falsifying their working hours, claiming overtime for work they never completed. Perpetrators often collaborate with those who have access to the payroll system to execute these fraudulent actions.
Prevention Tip: Always perform thorough employment background checks on new and existing employees, especially in roles related to human resources, payroll, or finance. Regular payroll audits and verification of any changes are essential in preventing fraud.
Also read:
Ghost employees: A threat to organizations
4. Charity Fraud
Charity fraud occurs when individuals or groups pose as charitable organizations to fraudulently collect donations. The holiday season, especially around religious holidays, is a prime time for fraudsters to exploit emotional appeals and religious messages to convince people to donate.
These scammers may reach out to potential victims via phone calls, social media, or email, often suggesting hard-to-trace payment methods like gift cards or mobile payment apps (e-wallets). They may even request that donations be transferred directly to the scammer’s bank account, especially in international charity fraud schemes.
Prevention Tip: Always conduct due diligence on charitable organizations before making any donations.
5. Credit Card Fraud
Credit card fraud tends to increase during the holiday season, particularly with the rise in online shopping. Visa Indonesia reports a surge in fraudulent activity during this time, affecting both card-present (CP) and card-not-present (CNP) transactions.
Fraudsters often steal credit card information to make unauthorized purchases. A common tactic is the use of a skimmer device, which is installed on ATMs or point-of-sale terminals to capture card details when users make transactions.
Prevention Tip: Always take your card and receipt immediately after a transaction, and avoid leaving your card in the machine for extended periods.
6. Invoice Fraud
Invoice fraud involves sending fake invoices that appear legitimate to obtain unauthorized payments. The scams can vary, such as modifying an original invoice by adding extra fees or changing payment details. Perpetrators often gain access to the email or communication systems between a company and its vendors.
In another instance, fraudsters impersonate legitimate vendors by using similar names and contact information, then send invoices for goods or services that were never ordered.
The end-of-year rush can make employees less vigilant, increasing the likelihood of overlooking details in financial transactions — something scammers take advantage of.
Prevention Tip: Always verify all invoices received and double-check transaction details before processing payments.
As a business or individual, staying alert is crucial, especially when conducting transactions. One of the best ways to protect yourself is by thoroughly verifying each transaction. By understanding different types of fraud and their tactics, we can minimize the risk of loss and ensure that the holiday season remains safe and enjoyable.