Abhijit Gole, a Mumbai-based businessman, recently found that his chartered accountant (CA) of 15 years had duped him of Rs 25 lakh by forging his signature.
Many of us may have little choice but to trust our financial intermediaries like CAs and brokers. And many times, they have powers to manage our money. As a result, brokers may buy or sell shares without our consent or even knowledge.
This has been highlighted by the recent Trend and Progress of Banking in India (2008-09) report of the Reserve Bank of India. In the report, the central bank analysed the data on frauds reported by various banks and came to the conclusion that banking frauds were perpetrated to a large extent by and with the help of intermediaries and third-party service providers. It even made a list of such middlemen, which included CAs, travel agents, real estate developers, builders, lawyers and valuers, among others.
To avoid such frauds, it has advised the Indian Banks’ Association to make a list of such entities and professionals and circulate it among banks.
“Retail customers fall easy prey to frauds from intermediaries such as CAs, developers and travel agents as they cannot avoid sharing confidential information with them,” said the head of compliance with a private bank.
For instance, lawyers can provide fake certificate of a property’s title or a valuer can inflate the value of a property to help someone get more loan. They can do all this easily as they have access to their clients’ confidential information such as bank account numbers, income tax-related documents and property papers.
Here are some steps that individuals can take to avoid such scams:
CAs: Usually, CAs are hired to file tax returns. Businessmen and high networth individuals also use their services to understand the tax implications of their financial dealings. This involves sharing confidential data such as PAN cards and handing them account books and cheques.
More From This Section
“In such dealings, people can avert frauds by following the basics,” said Jehengir Gai, a consumer activist who handles such cases. As a habit, one should regularly check bank accounts and credit card transactions. Also, don’t hand over a blank cheque or an entire cheque book to anyone.
“There have been cases where intermediaries have forged signatures by using the impression on cheque-book leaves,” said Gai. This is more prevalent in case of non-resident Indians who give a power of attorney (PoA) to these intermediaries.
Experts advise that while giving the PoA, individuals should take care that all the statements are mailed to them and not to the person holding the PoA. Also, when the PoA is cancelled, the institutions concerned should be informed.
Travel Agents: Often, travelers have to give their passports and at times even credit card details to their travel agents.
“If a person wants to buy foreign currency, some agents seek a blank cheque so that the amount can be filled once the exact exchange rate is known. This can be misused,” said a banker. Also, avoid sharing credit cards details with agents. If unavoidable, do the booking with a reputed agency.
Builders and real estate agents: When the going was good, frauds in the real estate sector were common. Many developers and brokers sold the same flat to multiple parties and cheated the buyers as well as the banks.
“They forge papers and sell the flat. And banks give loans on the basis of those papers,” said the banker. To avoid this, if you are buying a property from a source that is not well known, hire a lawyer. Ask him to verify the title and also if there is an existing mortgage on the property.
