Cash payment can get you attractive discounts when you go shopping for consumer durables and other household items, but doing the same for investments can be dangerous.
Phani Shekhar learned this the hard way. It took this Hyderabadbased liaison clerk three years to save Rs 1.5 lakh-and just one mistake to lose it all.
Shekhar was cheated of his savings by an agent, who gave him a dud receipt and ran away with the premium Shekhar had paid for his life insurance policy.
He discovered the fraud in April this year, when the Life Insurance Corporation sent Shekhar a notice, saying that his policy was likely to be cancelled because the premium cheque had bounced. Confused by the missive, Shekhar contacted the LIC office and told them that he had made the payment in cash.
What he didn't notice was that the receipt that Vikram, the agent, had given him was for a cheque payment. "I had known this person for a few years. I never imagined he would defraud me," says Shekhar ruefully.
If Shekhar had known about insurance rules, he would not have fallen into this trap. It has been more than a year since the Irda prohibited insurance companies from accepting cash payments of over Rs 50,000 as part of a drive against money laundering.
Phani Shekhar, 38 years, Hyderabad
CHEATED OF Rs 1.5 LAKH
Shekhar bought a life insurance policy from an agent who used to visit his office.
He gave cash to the broker but did not notice that the receipt mentioned 'cheque' as the mode of payment. A week later, he was told that the cheque had bounced and the broker had vanished.
However, LIC rules clearly state that third-party cheques from agents should not be accepted. Any such cheque should be accompanied by a declaration signed by the issuer. "LIC officials are hand in glove with the scamster," alleges Shekhar.
He also claims that the addresses of customers are changed in the records so that the notice does not reach them.
How does one protect one's money from such scams? Rego says it is best to stay away from cash transactions across all investments. "Apart from facing the risk of misappropriation, you will not be able to trace the transaction in the long run. There is also no tangible proof of money changing hands," he says. Even if the agent is honest, you cannot hold him responsible for any delay in depositing the money and you don't get the receipt on time.
Meanwhile, a case has been registered against Vikram for fraud and cheating under Section 420. Hopefully, Shekhar will be able to recover his money after the police track down the scamster.