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When Robyn Mathis, a 41-year-old food production plant worker from Brunswick, Georgia, stepped off a flight to Philadelphia last June, she expected an easy passage to her destination.
She was set to pick up her rental car and charge it to her Chime card, as she had done several times before. For the last few years, the digital bank’s debit and credit cards had been her payment methods of choice.…Story continues…
By: Eliza Haverstock, Jeff Kauflin and Emily Mason
Source: Fintech’s Fraud Problem: Why Some Merchants Are Shunning Digital Bank Cards
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Critics:
Scammers are always looking to separate you from your money in business transactions. If it sounds too good to be true, it is. Common scams include advance fee schemes, Nigerian letter or 419 schemes, Ponzi schemes, pyramid schemes, and telemarketing fraud schemes. Banks have been concerned about the uneven playing field because Fintech lenders are not subject to the same rigorous oversight.
There have also been concerns about the use of alternative data sources by Fintech lenders and the impact on financial inclusion.Here are some of the key risks that FinTech companies may face in terms of financial crimes: Money Laundering: FinTech platforms can be vulnerable to money laundering activities, where illicit funds are processed through their services to appear legitimate.
However, while these apps offer many benefits, it also poses some risks. For example, fintech companies tend to be less regulated than traditional financial institutions. As these apps handle and capture huge amounts of user confidential data, they are more vulnerable to cyberattacks. Be suspicious of anyone who asks you for financial assistance, no matter how dire their circumstances seem to be.
If you encounter one of these storylines when you’re talking to a new love interest on the internet, there’s a good chance they’re scamming you. “I need money to support a sick relative.” If a bank itself fails, and a fintech (or other third party) has good records, the fintech’s customers should be able to collect their insured deposits fairly quickly. If a nonbank fintech, particularly one with deficient records, implodes, all bets are off.
These third-party relationships can create significant risk. A fintech company’s cybersecurity is entangled with its service providers’ security practices. Without careful controls, code dependencies can open attack vectors into a fintech company’s systems—and allow hackers into its customers’ systems. In parallel, the threats posed by FinTechs have the ability to disrupt four categories of incumbents’ business – market share, margins, information security/privacy and customer churn – at higher rates when compared to other financial sectors.
Fintechs engaged in lending make money through interest on loans. Crowdfunding and Investments: Earning fees from crowdfunding campaigns or managing investment platforms. White Label Solutions: Providing customized financial solutions to other businesses for a fee. You should verify that the fintech company is licensed by a relevant financial authority and shows adherence to regulations and check compliance,”
You can do this by looking at a simple financial audit. The fintech company should have transparent policies. Fintech is a field that can offer vast opportunities for learning and career progression. It is an opportunity for anyone is who is passionate, driven and ‘willing to learn’ to succeed in scaling new heights in their career. It’s important to remember that fintech is for everyone, regardless of their background.
Don’t respond to unsolicited cold calls, emails, junk mail, late-night commercials or infomercials, or social media posts that are either overly attractive or fear-inducing. These are all common tactics scammers use to entice you to engage. One of the most significant warning signs is when the person starts asking for money. Scammers often come up with various reasons, such as emergencies, medical expenses, or travel costs.
If you Google their name and don’t find much, you could be dealing with a scammer. Their social media accounts look suspicious. Look for anything that feels off, such as a low friend count, no recent posts, or only the same photos as on the dating site. They may appear to have an overwhelming intensity. Your bank account number alone is not enough for someone to withdraw money from your account.
Scammers can use your bank account and routing number to commit ACH fraud, make online purchases, deposit money for illegal activities, and create fraudulent checks. Ignore calls from 3-digit international area codes that are likely to be scams, including 232, 268, 284, 473, 664, 649, 767, 809, 829, 849, and 876. Be wary of calls from unknown numbers with your own area code. These may be international caller ID spoof scams that appear local.
No financial transaction is entirely risk-free. The same goes for FinTech and Digital Finance products. Always be vigilant! Before trusting your money with a FinTech-enabled entity, confirm that you are dealing with a reputable and authorised provider and make sure that you understand the product. The goal of fintech banking is to make the financial system more efficient by using technology to automate processes, reduce costs, and speed up transactions.
In other words, fintechs are using technology to make banking better. Fintech platforms empower individuals and businesses to take greater control of their finances. User-friendly investment apps, robo-advisors like Robinhood, and alternative trading platforms like Binance are examples of how technology has made financial services more accessible to everyone. Fintechs weaken the relationships between financial institutions and their customers/members.
It is already possible for people to manage their finances with minimal interaction with their banks and credit unions. One of the main issues is cybersecurity since fintech businesses handle sensitive financial data, making them easy targets for cyberattacks. Furthermore, there is increasing competition in the fintech sector as both new and existing businesses compete for market share.
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