NAME- ANAND KUMAR

ROLL NO- 22/651

S U B J E C T- F I N A N C I A L L I T E R A C Y
COURSE – BA (HONS) POLITICAL SCIENCE
 DEFINITION OF
PONZI SCHEME
• A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier
investors with funds from more recent investors. Named after Italian
businessman charles ponzi , the scheme leads victims to believe that profits are
coming from legitimate business activity (e.g., product sales or successful
investments), and they remain unaware that other investors are the source of
funds. A Ponzi scheme can maintain the illusion of a sustainable business as long
as new investors contribute new funds, and as long as most of the investors do
not demand full repayment and still believe in the non-existent assets they are
purported to own.
• PRECAUTIONS-
• 1.If someone tries to sell you on an investment that has huge and/or immediate
returns for little or no risk, it could well involve some sort of fraud. For example,
Bernie Madoff provided investors with consistent return of 1-1.5% per month for
10 years before everything fell apart. Be extra-cautious if the returns are being
generated by something you never heard of or in a way that's impossible to
follow.
• 2. Someone contacting you unexpectedly, perhaps inviting you to an investment
seminar, is often a red flag. Investment scams often target elderly people, or
those close to or in retirement.
• 3. Research a broker, financial advisor, brokerage company and investment
advisor firm using the Financial Industry Regulatory Authority’ BrokerCheck.
Verify that the professional is licensed and look for any negative information.
BrokerCheck’s files on Bernie Madoff and Herbert Ivan Kay both offer examples
of what negative reports look like.
• SECURITY-
• 1. Ponzi schemes often involve unregistered investments, says
the Securities and Exchange Commission (SEC). Start by asking the
person offering the investment: If the investment isn’t registered, ask
why (not all investments must be registered). If you’re told it is, verify by
following the advice FINRA provides for checking the Securities and
Exchange Commission's EDGAR database, your state securities regulator
and FINRA’s market data.
• 2. Never put money into an investment you don’t fully understand. There
are many online resources to help you learn how to invest and how to
evaluate opportunities for risk and potential gain, including here at
Investopedia. Don't write a check to – or open an account with – anyone
who won’t fully answer your questions or who tries to discourage
questions by saying the investment is using secret, proprietary or too-
complex-for-laymen strategies.
• 3. If you think an investment is a Ponzi scheme or any other type of
scam, or you’ve been victimized, file a complaint with the Securities and
Exchange Commission, FINRA and your state securities regulator . One
sign that you’ve put your money into a Ponzi scheme is that you’re
unable to obtain promised payments or cash out. Some scammers offer
investors even higher returns to discourage them from departing, says
the SEC.
 DEFINITION OF
ONLINE FRAUDS -
• Online fraud is a type of cybercrime fraud or
deception which makes use of the internet and
could involve hiding of information or providing
incorrect information for the purpose of tricking
victims out of money, property, and
inheritance. Internet fraud is not considered a
single, distinctive crime but covers a range of
illegal and illicit actions that are committed
in cyberspace. It is, however, differentiated
from theft since, in this case, the victim
voluntarily and knowingly provides the
information, money or property to the
perpetrator. It is also distinguished by the way
it involves temporally and spatially separated
offenders.
• PRECAUTIONS-
• 1. Keep your computers and mobile devices up to date.
Having the latest security software, web browser, and
operating system are the best defenses against viruses,
malware, and other online threats. Turn on automatic
updates so you receive the newest fixes as they become
available.
• 2. Set strong passwords. A strong password is at least eight
characters in length and includes a mix of upper and
lowercase letters, numbers, and special characters.
• 3. Watch out for phishing scams. Phishing scams use
fraudulent emails and websites to trick users into disclosing
private account or login information. Do not click on links or
open any attachments or pop-up screens from sources you
are not familiar with. Forward phishing emails to the Federal
Trade Commission (FTC) at spam@uce.gov – and to the
company, bank, or organization impersonated in the email.
• SECURITY-
• 1. Keep personal information personal. Hackers can use
social media profiles to figure out your passwords and
answer those security questions in the password reset
tools. Lock down your privacy settings and avoid posting
things like birthdays, addresses, mother’s maiden name,
etc. Be wary of requests to connect from people you do
not know.
• 2. Secure your internet connection. Always protect your
home wireless network with a password. When connecting
to public Wi-Fi networks, be cautious about what
information you are sending over it.
• 3. Shop safely. Before shopping online, make sure the
website uses secure technology. When you are at the
checkout screen, verify that the web address begins with
https. Also, check to see if a tiny locked padlock symbol
appears on the page.
• THANK YOU