The Most Common Types of Fraud and How to Avoid Them

Robert BuheckerFraud

Types of Fraud Prevention

What Is Fraud and How Does it Harm The Public?

Fraud is deliberate deception to unlawfully gain money, information, and more from their victims. This white-collar crime continues to be the uniform and chosen costume of the internet’s favorite masquerade ball. Regardless of the type of fraud, it’s always illegal and a criminal act. Fraud is also not a simple term with one meaning. Instead, it encompasses many areas of someone’s everyday life.

Fraudsters steal millions of dollars from people every year, with schemes that range from online dating site to college fraud schemes. A savvy computer user can use a plethora of online methods, including malware, ransomware, and more to get what they want from a user. However, due to data breaches and the dark web, fraud is easier to commit than ever before.

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The Most Common Types of Fraud

These are the most common types of fraud affecting the public today. Staying ahead of scammers is the best way to prevent financial damage.

Tax Fraud

Tax season has everyone scrambling to find out whether or not they’ll owe money or receive a refund. However, it’s also the time of year when fraud and identity theft are at their highest. An example of tax fraud might be when the scammer manages to get a victim’s social security numbers and receives the tax refund.

Avoid Tax Fraud

Avoiding tax fraud requires a few steps. First, it is important to files your taxes as early as possible. Second, watch out for the different phishing schemes that include IRS and tax professional imposters. Third, it is crucial to never share personal information with those you do not know.

Tax Fraud

Tax season has everyone scrambling to find out whether or not they’ll owe money or receive a refund. However, it’s also the time of year when fraud and identity theft are at their highest. An example of tax fraud might be when the scammer manages to get a victim’s social security numbers and receives the tax refund.

Avoid Tax Fraud

Avoiding tax fraud requires a few steps. First, it is important to files your taxes as early as possible. Second, watch out for the different phishing schemes that include IRS and tax professional imposters. Third, it is crucial to never share personal information with those you do not know.

For example, don’t reveal your social security number, or any other personally identifiable information to those you cannot fully trust.

Internet Fraud

Phishing, hacking, data breaches, ransomware and more are all forms of internet fraud. It’s a common way for criminals to search for sensitive information in these schemes for their own financial gain.

Avoid Internet Fraud

Internet fraud is not only clicking on a suspicious link or providing information to a third party. In most cases, a scammer can get the information they need from social media profiles. Essentially, to avoid online fraud, avoid oversharing your life.

Mail Fraud

This might be the oldest form of fraud with its origins starting in 1872. Mail fraud, also known as wire fraud, is a scheme that obtains money or property utilizing false or fraudulent pretenses, promises, exchange, or give away. Examples of mail fraud schemes include employment fraud, financial fraud, and Honest Services Fraud.

Avoid Mail Fraud

The best way to avoid mail fraud is to research the sender. In almost all cases, the senders and mail will look legitimate. Conventional schemes for these practices are sweepstakes, lotteries, chain letters, donation requests from a fake organization, fake credit check scams, or fees for services that are usually free.

First, use the internet because a quick Google search for any organization can save you from donating or sending money to a fraudulent service or organization. Chances are, many people received the same letters and reported it, too. Second, if the mail is fraudulent, report it to the United States Department of Justice.

Insurance Fraud

Insurance fraud is an act against the insurance process. Perpetrators of insurance fraud typically use premium diversion, fee churning, asset diversion, and workers compensation fraud.

Insurance fraud is broken into two types: hard and soft. Hard fraud is when a person intentionally plans a loss and includes a plotted auto theft, crashing their car, destroying their property in a fire, or organizing a robbery of their personal property. Once the crime is committed, they file an insurance claim to collect the money.

Soft fraud claims are legitimate ones; however, the victim usually grossly exaggerates their claims. For example, if there is a robbery, a business owner might say that more was stolen or vandalized than what was. Alternatively, if someone is in a car accident, they can claim that there is more damage than what there is. However, it can also include not reporting preexisting conditions to an insurance provider to obtain lower premiums and rates.

Avoid Insurance Fraud

SecureForensics can help with insurance fraud. In most cases, there are videos from CCTV or onboard infotainment systems in cars. A computer forensics investigation can investigate various digital devices, sort through digital communication, phone calls, and even unravel the information that a scammer might try to delete.

Credit Card Fraud

This encompasses any fraud that involves a credit or debit card. Scammers are always unauthorized and can use a variety of ways to get your card information. Some methods include phishing and fake websites, RFID scanners, application fraud, the creation of a phony credit card using your numbers, and account take over.

Credit Card Fraud

Avoiding credit card fraud isn’t difficult. First, avoid using your debit card while shopping online, at small businesses, gas stations and more. When you use your debit card, there is often little that can be done to get your money back. However, a credit card offers protections that a debit card does not. Additionally, use a wireless payment app like Apple Pay or Google Wallet. While connected to your bank account, the apps scramble your data and make it nearly impossible for someone to get your information.

Bank Fraud

Similar to credit card fraud, a scammer will try to obtain access to accounts held by a financial institution or money from depositors by posing as a bank. In most cases, you will not be responsible for these charges if you report them within 24 hours.

Avoid Bank Fraud

This might be something that is not entirely possible to stop. To prevent bank fraud risks, use two-factor authentication.

Second, set up alerts from your bank for large purchases. This way, you can monitor and prevent unauthorized purchases and turn your card off before anything too serious happens.

Third, if you are a business, look over your accounts daily to spot any purchases that you did not make or authorize.

Voice Calls

Voice fraud is on the rise, with an estimated fifty percent of all voice calls this year to be scams. Common scams include fake calls from the Internal Revenue Service (IRS). These calls usually ramp up during tax season and ask for confidential information like social security numbers, bank account information and more. Unfortunately, senior citizens are most prone to fall for these types of scams.

In addition to IRS scams, the holiday seasons beg for scammers to call you. These types of calls show up during the holiday season asking for donations to charitable organizations.

Avoid Voice Call Fraud

Avoiding voice call fraud involves a bit of common sense. First, if you do not recognize a number, don’t answer the phone. In this instance, use your handy friend Google and search phone number. Sites like “Caller Beware,” allow users report phone numbers to help validate and verify if it’s a legitimate caller.

How to Prevent and Report Fraud

The best thing to fo to prevent fraud is to stay alert. You can sign up for the official Federal Trade Commission’s scam alerts, here. There is hope if you are the victim of fraud. First, it’s crucial you file a police report and notify your financial institutions. Additionally, call TransUnion, Experion, and Equifax to alert them about the fraud and to reduce monetary and credit damages. For a free phone consultation on what you can do about fraud, call us at 1-800-288-1407.