Financial fraud is defined broadly as an intentional act of deception involving financial transactions for personal gain. Fraud is both a crime and a civil law violation. Many fraud cases involve complex financial transactions carried out by ‘white-collar criminals,’ or business professionals with specialized knowledge and criminal intent.
An unscrupulous investment broker, for example, may offer clients the opportunity to purchase shares in precious metal repositories. His professional investor status lends him credibility, which can lead to justified credibility among potential clients. Those who believe the opportunity is genuine contribute large sums of money in exchange for authentic-looking bond documentation.
Victims may sue the investment broker for fraud if he is fully aware that no such repositories exist and still receives payments for worthless bonds. According to the Federal Trade Commission, American consumers lost more than $5.8 billion to fraud last year, up from $3.4 billion in 2020 (a more than 70% increase). According to the FTC, nearly 2.8 million consumers reported the fraud to the agency in 2021, the highest number since 2001. Around 25% of those scams resulted in a financial loss, with the average person losing $500. The true toll is almost certainly higher because some incidents were almost certainly not reported to the agency.
Financial fraud is defined broadly as an intentional act of deception involving financial transactions for personal gain. Fraud is both a crime and a civil law violation. Many fraud cases involve complex financial transactions carried out by ‘white-collar criminals,’ or business professionals with specialized knowledge and criminal intent.
An unscrupulous investment broker, for example, may offer clients the opportunity to purchase shares in precious metal repositories. His professional investor status lends him credibility, which can lead to justified credibility among potential clients. Those who believe the opportunity is genuine contribute large sums of money in exchange for authentic-looking bond documentation.
Victims may sue the investment broker for fraud if he is fully aware that no such repositories exist and still receives payments for worthless bonds. According to the Federal Trade Commission, American consumers lost more than $5.8 billion to fraud last year, up from $3.4 billion in 2020 (a more than 70% increase). According to the FTC, nearly 2.8 million consumers reported the fraud to the agency in 2021, the highest number since 2001. Around 25% of those scams resulted in a financial loss, with the average person losing $500. The true toll is almost certainly higher because some incidents were almost certainly not reported to the agency.
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Scammers have more tools than ever to separate you from your hard-earned money in today’s world, especially as more people spend time online and conduct business virtually. Whether you’re looking to make smart investments or simply avoid being a victim of financial fraud, it’s critical to be aware of these major warning signs.
If someone contacts you out of the blue with an appealing investment opportunity or monetary offer, this is a clear indication that you are being targeted for fraud.
On his website, FinancialMentor, money expert Todd Tresidder advises that any unsolicited calls, letters, emails, or knocks on your door should put you on high alert. These schemes are designed to make you poorer, not richer, whether they come from a slick-talking sales agent on the phone or an alleged royal via the internet.
Unsolicited phone or email contact from ostensibly legitimate sources should also raise your suspicions. Fraudsters impersonate actual businesses and financial institutions in these “phishing” scams, attempting to persuade you to click a link or call a number, thereby disclosing your bank account number or opening your electronic device to hackers. Always double-check that the communication is coming from someone you know and trust.
A request for an unusual payment method, whether you are the giver or the receiver, is a sure sign of financial fraud.
According to the Consumer Financial Protection Bureau, you are likely at risk if you are asked to send money via wire transfer, courier, prepaid gift card, or any complicated scheme. Justin Pritchard, writing for The Balance, warns that wire transfers are especially risky because they cannot be reversed once you discover you’ve been duped. A request for access to your bank account, credit card, or any other financial account is another clear warning sign. If you’re selling something online, Pritchard advises against accepting any form of payment other than cash.
Be wary of sales pitches, whether, from individuals or advertisements, that urge you to get in on the ground floor or act immediately. Avoid being pressured to buy quickly at a “low, low price,” to buy now because “tomorrow will be too late,” or to overreact to being told “don’t be a fool,” or “when this becomes public knowledge, people will be lined up to take advantage of this golden opportunity.”
Shady promoters may even offer to have your check picked up by an express delivery service. They don’t want you to think, read the fine print, or talk to others. The more time you have to investigate a dubious investment offer or consider a fraudulent request, the less likely it is that you will be scammed. Many con artists use pressure or even threats to persuade you to make a quick decision.
According to the CFPB, pressure can be positive, such as a push to act quickly on an offer or an investment before the opportunity is lost.
According to Pritchard, pressure can also have a negative impact. A scam is likely if you are threatened with jail, a tax audit, or other dire consequences for failing to act. Any form of guilt-tripping or intimidation should also make you cautious.
Have you ever had a message appear in your browser claiming that a virus has been discovered and that you should contact the tech support number listed? Don’t do it – it’s most likely a scam to get you to pay money to remove a virus that doesn’t exist.
It’s a big emergency if someone has stolen your personal or business information. You may need legal and procedural advice to fix the problem. Our team can help you!
“If it seems too good to be true, it probably is,” you’ve probably heard before. It’s sound advice, especially in financial matters. Promises of market-beating investment returns, guaranteed or low-risk offers, and get-rich-quick schemes, according to Tresidder, are all red flags that you should avoid making a financial commitment.
Another good source to consult before making any risky financial decisions is your wealth management advisor. Tresidder also cautions against accepting offers based on secret or insider information that others do not have access to. Even if this information is correct, acting on it may be illegal.
Criminals are purposefully using email schemes to defraud financial institutions and about their customers by tricking them into making what appear to be legitimate wire transfers.
These schemes frequently target real estate buyers or other parties involved in the transaction (broker, title agent, attorney, buyer/seller) with the goal of changing payment instructions and diverting funds used to close the deal. To avoid becoming a victim of these wire transfer scams, make sure to independently verify wire instructions with the intended recipient before sending any funds. Be cautious when transacting online or with unknown third parties.
You are asked to transfer funds or pay by mail with a cashier’s check or money order when buying or selling a car online. The buyer pays you in excess with a check and requests that you refund the difference. When you try to cash or deposit the check later, it bounces.
Before paying off loans or delivering items to a buyer, always ensure that checks have cleared. Never put your trust in a buyer or seller who refuses to speak on the phone or meet in person.
The truth is that there are scammers everywhere. They may appear innocent at first, but they are already preying on your emotions. They’ll soon try to dupe you into handing over your personal information and money.
They may pretend to be long-lost relatives or call about bogus issues with your internet connection, computer, or phone operating system. Some of the most common scams involve people posing as IRS agents and threatening arrest if you do not comply with their requests. Here’s how they operate—and how to avoid becoming their next victim.
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Authorities claim that thousands of people each year, ranging from ordinary citizens to sophisticated professionals, fall victim to IRS and other imposter scams, losing millions of dollars.
According to a Federal Trade Commission (FTC) report, one in every five Americans who reported imposter fraud lost money to scammers, with the average individual loss being around $850. Imposter scams cost Americans $1,190 million in total in 2020, and those were just the cases reported to authorities. Many victims do not file reports because they are embarrassed. Of course, imposter scams aren’t the only way for criminals to steal your personal information.
Your information is stored in a variety of locations, including printed documents, computers, smartphones, the cloud, your employer, doctor, financial service providers, your tax preparer, and the IRS. This data, particularly your tax returns, contains valuable personal information such as your Social Security number (SSN), address, phone number, profession, marital status, and income, all of which can be used to impersonate or intimidate you. While you can’t prevent all types of tax-related fraud, you can reduce your chances.
The IRS issues an annual list of what it refers to as the “dirty dozen”—some of the most common tax scams that are currently in circulation. In 2021, new scams emerged to capitalize on coronavirus tax breaks. The IRS warns taxpayers to be especially wary of the 12 scams listed below.
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Criminals attempted to steal people’s stimulus payments by sending fraudulent text messages, phone calls, and emails, as well as stealing checks from mailboxes. In addition, some nursing homes and care facilities have tried to steal CARES Act stimulus payments from their Medicaid patients.
Thieves have stolen taxpayers’ personal information and used it to claim state unemployment compensation. You may not realize you’ve been taken advantage of until the IRS sends you a Form 1099-G stating that you received unemployment pay that you need to report on your tax return—even if you never received that pay.
Occurs when emails, websites, text messages, or social media appear to be from the IRS in order to entice people, businesses, and tax professionals to divulge personal or financial information. Do not click on any links or download any attachments included with such a communication.
Criminals impersonating IRS agents threaten people with arrest, deportation, license revocation, or the cancellation of their Social Security number if they do not make an immediate payment.
In order to target your friends and family, or they impersonate your friends and family in order to target you.
This malicious software infects the victim’s computer and then encrypts its data. The scammer demands money in order to regain access to locked files. This scam frequently targets businesses and institutions, so it’s critical to be on the lookout for potential fraud both at work and at home.
Fake charities, which often have names that sound similar to legitimate charities, may ask you for money, gift card numbers, or personal financial information.
Many of the scams listed here target seniors and immigrants more than other groups. Professional and personal relationships that appear to be trustworthy can be an entry point, especially if no one appears to be looking out for the target. Threatening phone calls are a particular risk for people who speak little or no English and may have limited access to information designed to warn them about such scams.
These companies charge you money under the guise that they can get you an offer in compromise with the IRS to settle your tax debt for pennies on the dollar.
A dishonest tax preparer may steal your personal information. Also, keep an eye out for “ghost preparers.” They will persuade you to pay them for tax preparation by promising you overly large refunds. They will, however, refuse to sign your return and will not have a valid preparer tax identification number (PTIN). If you are caught, you could face fraud charges.
Criminals work with or against employers and financial institutions to obtain fraudulent payments from state and local governments.
Unscrupulous promoters promise that by participating in complex schemes, filers can claim large tax deductions. They charge taxpayers to participate in these schemes and hold their clients liable for fraudulent tax underpayment. A good rule of thumb is that if it sounds too good to be true, it probably is.
Let’s look at how IRS scammers contact people in more detail.
Generally, the IRS will contact you via letter first. It does not make random phone calls, and it does not communicate with taxpayers via email or text messages.
The IRS never demands payment in advance. All taxpayers have the right to contest the IRS’s judgments before paying, with financial settlement taking place only after an agreement is reached between the IRS and the taxpayer. It’s a scam if you’re asked for immediate payment or else.
Because there are so many ways for criminals to steal your personal information without your knowledge—from hacking and phishing to social engineering—anyone can become a victim of an IRS-related scam. Your chances of becoming a victim will decrease if you are aware of the scams and how they operate. Never give information in response to an unsolicited phone call or email.
New scams emerge all the time, so trust your instincts if anything appears suspicious. If you are concerned about your taxes, never engage with anyone who contacts you and always contact the IRS directly using the information on the official IRS website, IRS.gov. The IRS and other government agencies rely on you to bring these scams to their attention.
Scammers are impersonating legitimate debt collectors and threatening Texans with debts they do not owe. Their strategies can be quite intimidating. Learn how to identify and avoid false debt threats.
It’s simple: Someone contacts you — usually by phone, but also by text message, fax, mail, or email — and claims you owe money. The debt may be completely fictitious, canceled, discharged, forgiven, or past the collection period. In any case, the scammer will use a variety of techniques to get you to pay, including intimidation, lies, harassment, and so on.
Before you pay any debt collector, make sure the debt is real and valid. Also, keep an eye out for signs of a debt collection scam. Knowing all of your real or valid debt is one of the best ways to avoid a debt collection scam. If someone contacts you about a debt you owe, you can quickly determine whether the contact is genuine or fraudulent.
Texas consumers have reported many tactics used by debt collection scammers. These scammers can be very convincing, which is why you need to spot the signs of a fake debt collection:
True debt collectors already have a lot of your information, such as how much you owe, your address, social security number, birthday, and so on. However, debt collection scammers are unlikely to have all of your information, so they will request it. If they don’t seem to know enough about you, they’re probably a scammer.
Whenever a debt collector attempts to collect a debt, request all of their company’s information, including:
All of these specifics should be requested. Make a note of them. Send a letter to the agency requesting that they confirm their debt in writing. Look up the company’s name on the internet, visit their website, call them, and so on. Do your research.
If they refuse to answer all of your questions, you’re probably in the middle of a scam. Please do not respond or file a complaint with us.
To begin with, debt collectors are prohibited by law from lying, threatening you with things they cannot do, or posing as government officials. Keep in mind that you have debt collection rights.
Scammers frequently use intimidation and fear to obtain payment. You will not go to jail for your debt, so if the collector tells you otherwise, they are lying. You can’t also be sued in a county other than the one where you lived when you signed the contract or when the lawsuit was filed. Stop communicating with them and file a complaint.
True debt collectors will often try to get paid as soon as possible, but if your collector is being overly aggressive, you should be suspicious. Scammers survive by convincing people to pay fictitious debts before they realize they’re being duped. So, if a debt collector pressures you to pay immediately, proceed with caution.
Scammers don’t want to be found, so they frequently demand that you pay with a Visa gift card, an iTunes gift card, a wire transfer, or some other untraceable method. Genuine debt collectors will accept regular, trackable payments (e.g., check, traditional credit card, etc.). Never send a debt payment via wire transfer, especially to a foreign country.
First, contact your local law enforcement if criminal activity was involved. Then submit a complaint to us. The more we learn about current scams, the more likely we will be to identify and prevent similar scams in the future.
Never, ever try to “scam the scammer.” You may be angry, but attempting to exact revenge will fail. The more you interact with scammers, the more likely it is that you will lose more money and time. Finally, get in touch with a major credit reporting agency. Inform them that you have been targeted by bogus debt collectors. Request that a fraud alert is placed on your credit report.
They must notify the other two agencies about your fraud alert.
A government impersonator scam frequently begins with a phone call, email, or text message from someone claiming to be from a government agency. To appear official, they may give you their “employee ID number.” They may also have information about you, such as your name or address.
They frequently claim to work for the Social Security Administration, the IRS, or Medicare, but they sometimes use fictitious agency names, such as the non-existent National Sweepstakes Bureau. They’ll also tell you why you need to send money or give them your personal information right away. If you receive a call like this, hang up. It’s a con artist. Because government agencies will never call, email, or text you to request money or personal information. Only a scammer will do that.
You receive a call, email, text message, or social media direct message claiming to be from the Social Security Administration and stating that your Social Security benefits will be terminated or your Social Security number will be suspended unless you pay immediately. They’ll tell you that you have to pay with gift cards, wire transfers, cryptocurrency, or cash mailed to you.
They may even threaten you with arrest if you do not pay. However, it is not the Social Security Administration that is calling. Your benefits will not be suspended, and you owe nothing. It’s a scammer attempting to steal your money or personal information in order to steal your identity.
What you should know is that the genuine Social Security Administration will not threaten you or suspend your Social Security number.
The genuine Social Security Administration will not call, email, text, or send direct messages on social media to request payment. Nobody from the government will ever ask you to wire money, pay with gift cards, pay with cryptocurrency, or send cash. That phone call, email, text, or direct message is a scam.
What to do: Hang up if you receive an unexpected call from someone claiming to be from the Social Security Administration. It’s likely that you’re being called by a scammer. Call back the number that the caller gives you, not the one that appears on your caller ID. Do not press any numbers if the call is a robocall. Pressing numbers may result in additional calls.
Ignore calls, emails, text messages, and direct messages purporting to be from the Social Security Administration and requesting payment or confirmation of your Social Security number or other information. The real agency will never call, email, text, or send social media direct messages demanding money or information.
If you require assistance from the Social Security Administration, contact your local office directly. The phone number can be found on the agency’s website. See the Social Security Administration’s advice on what to do if you receive a call claiming that your Social Security number or account is in trouble. And report these calls to the agency’s Inspector General’s Office. If you provided personal information to a scammer, go to IdentityTheft.gov to learn how to protect your identity.
Scammers can create complex scams that can trap even the most cautious of people. But it’s not too late because we can help you track the damage done by scammers. We can help you get your money back!
The con: You may receive a call, email, text message, or direct message on social media requesting your Medicare number in order to obtain a new Medicare card. Alternatively, they may request your bank account or credit card number in order to pay for a new card. That’s a scammer on the phone. Medicare will send you your cards without you having to do or pay anything.
Another variation of the scam involves a caller claiming to need your Medicare number for a medical equipment claim that you do not recall making. That is also a ruse. Impersonators of Medicare want to use your Medicare number to claim benefits for themselves.
What you should know: A legitimate government agency will not contact you to request your Medicare number or other personal information unless you have first called 1-800-MEDICARE and left a message. A legitimate government agency will not call, email, text, or send you a direct message on social media to try to sell you something or ask you to pay to get your Medicare card.
Do not respond if you receive an unexpected call, email, text message, or direct message on social media from someone claiming to be associated with Medicare. That person is most likely a con artist. Call them back at the number they give you, not the number that appears on your caller ID. If you receive a robocall, do not press any numbers. Pressing numbers may result in additional calls. Do not click on any links in an email or text message. Scammers create these links in order to steal your money and personal information.
For questions about your benefits, your card, your Medicare number, or to report anything suspicious, call 1-800-MEDICARE (1-800-633-4227). More information about Medicare fraud can be found at medicare.gov.
If you provided personal information to a scammer, go to IdentityTheft.gov to learn how to protect your identity.
Here are other examples of government impersonator scams:
If the daily business pages teach you anything, it’s that fraud is a risk for any business. No matter how dedicated your finance team is or how tight your systems are, you will still be vulnerable to fraud, whether by an employee or an outside party.
Unfortunately, as financial tools and systems have evolved, so have the methods used to defraud businesses. Fraud cost businesses around the world an estimated £3.24 trillion in 2017.
Business fraud not only costs companies money, but also causes a loss of public trust and harms relationships with service providers such as accountants and insurers. It’s also a major source of frustration for management. It’s a sad fact that for every time-saving advancement in modern technology, someone is eager to exploit it for criminal gain. As online banking and integrated accounting software have evolved, so have fraud techniques.
While digital banking systems have eliminated certain types of fraud, such as physical invoice forgery, they have also given rise to new types of fraud, such as identity theft and phishing. In fact, identity theft has become so common that the fraud prevention service Cifas reported 89,000 cases in the last year.
Employees must be aware of the risks and keep sensitive information safe and secure as a result.
Regardless of the type of financial fraud, it is critical to report the crimes to the appropriate agencies and law enforcement as soon as possible. Financial fraud should also be reported as soon as possible to the appropriate authorities. Furthermore, victims should gather crime-related documentation, such as bank statements, credit reports, and tax forms from current and previous years, and continue to file important information throughout the reporting process.
Victims of scams are stressed out because they don’t know what to do. We have the tools and experience to fight off scams, and our team can help you in getting your money back.
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