Fraud

• What is Fraud? 

When concerning money, fraud is when you are deprived of your money through deceit or illegal methods. An example of fraud is when your card information is stolen, and someone goes on a shopping spree using your stolen information. Fraud is scary and can happen to anyone, no matter how prepared or smart you are. However, there are ways to protect yourself from fraud. 

• Fraud vs Scams

In most cases, scams are a type of fraud. Some people even use these terms as synonyms. When we talk about fraud and scams involving money, these two terms are very different, and the difference is important when you are the person who had their money or information stolen. The main difference between fraud and scams is authorization. 

In a fraud situation, the person being frauded does not know their information or money was stolen until it has already happened. 

In a scam situation, the person being scammed is aware they are giving away their money or information. Even though they are being deceived and are giving out this information or money under false pretenses, they are still aware that someone is receiving the money or information. 

Banks take this difference very seriously. Most financial institutions will not give you back your money if you are scammed since you authorized the transactions unless you file a police report and they catch the scammer. If it is a fraudulent transaction, most financial institutions will be able to give you part or all of your money back. 

• Avoiding Fraud and Scams

The number one thing you can do to avoid scams and fraud is to never give out your banking or personal information to anyone without double-checking they are trustworthy. Also, don’t give out any information in public. For example, don’t call your bank and give them your information while you are sitting in a coffee shop. Even if you think no one around you can hear, you never know who is listening. 

If you write down account information on paper, keep the paper locked up somewhere where no one but you has access to it.

Also, scammers and fraudsters can spoof phone numbers, your phone may tell you your bank is calling you when it is a scammer pretending to be your bank. If you get any calls from someone claiming to be with your financial institution and they are asking for your password, PIN, or other account login information, hang up and call your bank directly. There is a good chance that person was a scammer trying to login to your account. 

Finally, check your bank account and credit report often. Read your bank statements to make sure you recognize all the charges on your account. When you check your credit report, double-check that all the accounts and loans on your report are correct. Your credit report and bank statement are some of the first places you may notice fraud. 

• Examples of Fraud and Scams

Fraud and scams come in many forms, but familiarizing yourself with their normal patterns may help you spot and avoid them. 

• • • • Card Skimmers

A card skimmer is a device that sits inside of or around a card reader. The device usually is camouflaged and looks like a normal part of a card reader, but when you insert your debit or credit card, it transmits your card information. Card skimmers are usually found at gas station pumps or ATMs. To check for card skimmers, grab onto the card reader and see if it wiggles or pulls off. If it moves, there is most likely a card skimmer attached to the card reader. Also, if you put your card into a card reader and it feels tighter than normal or like your card is slightly stuck, there may be a card skimmer attached. If you have a card with a chip, card skimmers are not able to steal the information from a chipped card. So, it may be a good idea to use a chipped card when possible. 

• • • • Work From Home Scams

When looking for a job, you may come across some work from home jobs that seem perfect. However, when you start interviewing, the company may say that to be their employee, you need to purchase equipment from them or their special software. This is known as a work from home scam. No legitimate company will make you purchase equipment from them to work for them.

• • • • Lottery/Publisher’s Clearing House Scam

You may receive a letter or phone call stating that you won the lottery or won Publisher’s Clearing House, and you need to submit your personal information to collect your winnings. Unfortunately, you did not win anything. As great as it would be to suddenly become a millionaire, you cannot win a lottery or contest you did not submit an entry for. Also, Publisher’s Clearing House will always show up at your door if you win their contest. 

• • • • Paying in Gift Cards

You get a phone call from the IRS or the police department. There is a warrant for your arrest unless you pay them in gift cards! This is a common scam that uses fear to manipulate people into handing over money. All communication from the IRS is sent through the mail, and no police officer will ever call you demanding money so they won’t arrest you. Scammers usually demand gift cards as payment in this scam because gift cards can not be traced, and once the scammer has a picture of the gift card, they can spend it and not face any consequences. 

• What to Do if You Are Scammed

If you are a victim of fraud or a scam, call your financial institutions immediately. Let them know what is going on; if a scammer or fraudster has your bank information, your bank may need to make you a new account. Your bank may be able to stop incoming fraudulent charges, and they may be able to refund some of your money depending on the situation. Credit card companies are usually able to help you file a dispute on fraudulent charges to get your money back. 

Depending on the situation, your financial institution may instruct you to file a police report. This may be a necessary step to getting your money back, even if the police aren’t able to catch the person who took advantage of you.

If there is any chance someone may have enough of your personal information to steal your identity, contact the three credit bureaus through their websites or phone numbers to freeze your credit. Freezing your credit means that no one can open any loans, credit cards, or otherwise using your information. Personal information includes your social security number, birth date, current address, email, and phone number. A combination of these can be used to steal your identity.