Is a Scammer Targeting You?
Fraud is on the rise.
In 2021, Americans reported 2.8 million cases of fraud to the Federal Trade Commission (FTC) [*], with the average victim losing $550. And that’s only the cases that were reported.
Many people feel ashamed or embarrassed that they were tricked by fraudsters. But fraud can affect anyone. To protect yourself, your family, and your business, you need to know the warning signs to look out for.
In this guide, we’ll cover 20+ examples of fraud you’re most likely to face, the red flags to watch out for, and what to do if you’ve been the victim of fraud schemes.
What Is Fraud? What Are the Risks?
Fraud is a broad legal term that refers to situations where someone is intentionally dishonest in order to receive some kind of benefit from a person, business, or entity.
The goal of fraud is almost always money or financial gain. But that’s not the only reason someone will try to defraud you or your business. They could also want special services or treatments you wouldn’t normally give them.
Fraudsters can use outright deception to try and trick you into giving them what they want. Or, they might use misrepresentation and leave out critical information during applications. They could even pretend to be someone else, as in identity theft.
Fraud covers a wide range of different scams and crimes. But almost all examples of fraud fall under two categories:
- Business fraud occurs when customers, employees, or investors scam your business out of money or services.
- Personal fraud occurs when another person, group, or company tricks you into giving up money, services, or sensitive information that can be used for identity theft.
Both types of fraud can be devastating. But let’s start by looking at the most common fraud examples you’ll face in your personal life.
12 Examples of Personal Fraud (and How To Identify Them)
- Identity theft
- Imposter scams (phishing attacks)
- Credit card and debit card fraud
- Mortgage and loan fraud
- Fake check scams
- Employment scams
- Online fraud and malware
- Advance fee scams
- Ponzi schemes and investment fraud
- Tax refund fraud
- Healthcare fraud (medical identity theft)
- Cryptocurrency fraud
1. Identity theft
Identity theft is one of the most devastating, yet common types of fraud.
Identity theft is when a fraudster uses your personal information to empty your bank account, take out loans, or even commit crimes. To do this, they need your most sensitive information. This includes your bank account numbers, birth date, and Social Security number (SSN).
Cases of identity theft have more than doubled in the past two years with victims losing $5.9 billion, according to the Federal Trade Commission (FTC) [*].
Warning signs of identity theft:
- Strange charges on your credit card or bank statements.
- Missing or unexpected mail (fraudsters use a change-of-address scam to reroute your mail to their address).
- Calls from creditors for loans or debts you didn’t take out.
- Suspicious login attempts to your online accounts.
Pro tip: If you see any warning signs of identity theft, act fast.
2. Imposter scams (phishing attacks)
Fraudsters will often pretend to be someone else in order to get access to your bank accounts or steal your sensitive information. These imposter scams can be sent over spam emails, texts, phone calls, or even happen in person. (These are also known as “phishing” attacks.)
In an imposter scam, someone pretends to be someone you know or trust. For example, a family member, representative from a business you work with, or a government agency like the IRS.
They’ll ask you to “confirm” password and sensitive information or threaten you with legal action if you don’t send them gift cards or wire transfers. (This makes imposter scams a form of wire fraud.)
Imposter scams can also happen on online dating sites. In these "romance scams", the fraudster creates a fake persona and then tricks you into giving them information or money.
Warning signs of imposter scams:
- They’re asking for sensitive information like passwords, card numbers, or your SSN.
- They claim to be from a government agency and are threatening action against you.
- They ask you to send payments in gift cards, wire transfers, or cryptocurrency.
- Their messages contain spelling and grammar mistakes and sketchy visuals.
3. Credit card fraud and debit card fraud
Credit card fraud is when criminals use your card details to make illegal purchases or create duplicate credit cards in your name. Unfortunately, it’s easier than ever for scammers to steal your credit card numbers. They can use “skimmers” at vulnerable ATMs or simply purchase your details on the Dark Web for as little as $14 [*]. In recent years, there's also been a rise in familial fraud, which is when a family member opens a credit card in your name.
Debit card fraud is slightly different. In this scam, a fraudster needs to shoulder surf your debit card PIN and get access to your physical card (or skim the numbers and create a duplicate). Once they have both, they can go to an ATM and drain your account.
Debit card purchases and withdrawals also aren’t covered by the same federal laws as credit cards. So that means you’re most likely on the hook for any stolen funds.
Warning signs of credit and debit card fraud:
- Missing cards or a lost or stolen wallet.
- Charges you don’t recognize. (Tiny charges are a red flag of credit card fraud as scammers use them to verify your card numbers before making larger purchases).
- A sudden change in your credit rating.
Pro tip: A credit monitoring service can alert you of suspicious and help you prevent credit card fraud before a scammer can do too much damage.
4. Mortgage and loan fraud
Loan fraud is when a criminal uses your identity to take out fraudulent loans in your name with no intention of paying them back.
Mortgage fraud is a related but slightly different scam. In these examples of fraud, scammers prey on homeowners in several ways, such as:
- Promising to clear debts and prevent foreclosure for a fee (and disappearing after payment)
- Committing deed fraud to steal the equity in your home.
- Tricking you into being a “straw buyer” and using your good credit to secure a loan.
- Pressuring you into signing a complicated reverse mortgage that drains your home equity (i.e., reverse mortgage scams).
To protect yourself, check licenses, understand anything you sign, and be wary of deals that seem too good to be true.
Warning signs of mortgage and loan fraud:
- Unexpected new loans or hard credit inquiries on your credit report.
- Businesses claiming to be able to prevent foreclosure for an upfront fee.
- Someone attempting to change your home title.
5. Fake check scams
Fake checks are a type of bank scam in which a fraudster sends you a check that looks real and asks you to deposit it for them. They’ll offer a percentage of the money as a reward. But after you send them the remainder, your back will alert you to the fraud and withdraw the full check amount from your account.
Surprisingly, fake check scams are one of the few examples of fraud where younger people are more at risk. People in their 20s are twice as likely as older adults to fall for a fake check scam according to the FTC [*].
Warning signs of a fake check scam:
- Receiving a check for more than you requested.
- Someone asks you to deposit a check and wire the money to them.
- Any unsolicited check.
6. Employment scams
Job-seekers are a common target for fraudsters as they’re used to giving out personal information as part of their applications.
In an employment scam, fraudsters create fake job listings and ask you to supply sensitive information like your SSN. Or, they'll ask you to pay for training or equipment before you start. But after you send either, the ad and the person you were talking to disappears.
Don’t instantly trust sites like LinkedIn or Indeed, either. The Better Business Bureau reported that 32% of people who encountered a job scam said it originated on Indeed [*].
Warning signs of fake employment fraud:
- Any job that asks you to pay a fee to get hired.
- Employers asking you to pay for training or equipment before you start.
- Suspicious or too-good-to-be-true job offers.
- Job applications that ask for unnecessary information (SSN, bank details, etc.)
7. Online fraud and malware
Online fraud is a huge category that includes everything from social media scams to fake phishing websites. But one of the defining features of online fraud is the use of malware.
Malware is malicious software that gives hackers access to your devices. Once installed, they can see account details, passwords, and other sensitive information. Fraudsters trick you into downloading malware through links in spam emails or hiding them in other apps (called “trojans”).
Malware and trojans are just some of the many emerging cyber threats you need to watch out for.
Warning signs of online fraud and malware:
- Emails or fake text messages with suspicious links, attachments, or QR codes.
- When you hover over a link in an email it’s either a shortened version or doesn’t match what the text says.
- “Unsecure” websites (only trust sites that use https:// not http://).
Pro tip: Use a Virtual Private Network (VPN) with malware protection to keep your devices safe from online fraud and cyber attacks.
8. Advance fee scams
A common example of fraud that’s popular right now is offering a service or benefit for an upfront fee.
These can include services like lowering interest rates, canceling debt, restructuring student loans, or even more exaggerated claims like transferring overseas deposits or inheritances. But once you pay the fee, you’ll never get what was promised. Worse, these scammers also try to collect your personal information for identity theft at the same time.
Advance fee scams can also include lotteries and sweepstakes — especially ones that alert you that you’ve won when you know you didn’t even enter. Beware of collecting any prize if you don’t remember entering to win.
While there are legitimate taxes if you win sweepstakes, federal law prohibits spending money to win money.
Warning signs of advance fee scams:
- Any business or service that asks for a fee upfront before any service.
- A service that makes unrealistic promises especially around debt reduction or forgiveness.
- Asking you to sign a non-disclosure agreement (NDA) before the work.
9. Ponzi schemes and investment fraud
A Ponzi scheme is a kind of investment fraud that promises to help you make money. Often, it’s tied to an investment in real estate or a new business venture. But your earnings aren’t real — they’re just new funds from new investors, which are needed to pay back the earlier investors. The whole scam blows up when the money runs dry.
Warning signs of investment fraud:
- You’re promised high returns with little or no risk.
- Returns dry up after an initial large payout.
- You’re pressured to invest or get others to sign up.
10. Tax refund fraud
Individuals can commit tax fraud and avoidance. But one of the bigger risks to the average law-abiding citizen is tax return fraud. This is a scam where fraudsters file fake tax returns in your name and pocket the refund check.
Warning signs of tax refund fraud:
- You receive unfamiliar tax documents with your name on them.
- The IRS says you’ve already filed a return (when you know you haven’t).
- Your tax preparer won’t sign your return or can’t explain discrepancies.
11. Health care fraud (medical identity theft)
Health care fraud is a common example of fraud that doesn't directly target your money. Instead, criminals use your health insurance information to pay for medical bills. This is also known as medical identity theft.
To do this, fraudsters need your protected health information (PHI). Unfortunately, these documents have become a prime target for hackers. Millions of medical and insurance documents have been stolen and leaked in recent data breaches.
Warning signs of health care fraud:
- You receive unusual hospital bills or insurance claims.
- Your medical insurance provider sends you a change-of-address confirmation you didn’t ask for.
- An insurance claim is denied.
12. Cryptocurrency account fraud
Cryptocurrencies like Bitcoin and Ethereum have made thousands of people into overnight millionaires. But anything that promises to get you rich quickly can be a target for fraudsters.
According to the FTC, victims of crypto scams lost $80 million in just 6 months last year [*].
Some crypto scams to watch out for include fake crypto websites that steal your investments, “pump-and-dump” schemes, and phishing attacks designed to gain access to your crypto wallet and transfer out your coins. Crypto scams are also running rampant on Telegram.
Warning signs of a cryptocurrency fraud:
- Promises of guaranteed huge returns.
- A romantic interest, online account, or random caller insists on the value of a specific cryptocurrency.
- There are few or very vague details about what the cryptocurrency does or how it will give you a return.
10 Examples of Business Fraud (and How To Identify Them)
Fraud can happen in your personal life but it’s just as common at work. Here are some of the most common examples of business fraud you should be aware of.
- Insider fraud
- Payroll fraud
- Proprietary data and intellectual property fraud
- Accounting and invoice fraud
- Retail fraud (Counterfeit payments and return fraud)
- Bribery and corruption
- Asset misappropriation, misuse, or theft
- Worker’s compensation fraud
- Financial statement fraud
- Business tax fraud
1. Insider fraud
Insider fraud is when someone on the inside commits a fraud scheme. The fraudster could be a current or former employee, contractor, or business partner. The key is that they have access to information and processes that people on the outside don’t.
Insider fraud can be malicious – someone purposefully trying to defraud your business. Or, they can be negligent – an employee accidentally giving up financial information or credentials that leads to a data breach.
Cases of insider fraud have increased in both frequency and cost over the past two years, costing businesses millions of dollars [*].
Warning signs of insider fraud:
- Poor employee performance and combative behavior.
- Employees showing unexplained financial gain.
- Poor internal controls over log-in credentials.
- Strange network activity.
2. Payroll fraud
Payroll fraud is when a fraudster lies about their productivity, takes credit for sales they didn’t make, or requests reimbursement for fraudulent purchases. In extreme cases, someone on the inside might misclassify an employee to increase their salary or even create “ghost” employees and pocket paychecks for people who don’t exist.
For example, an “employee” at an Italian hospital collected a salary for 15 years without working a single day [*].
It might seem like payroll fraud could only happen at huge corporations. But it’s actually twice as likely to happen at small businesses [*].
Warning signs of payroll fraud:
- Errors or gaps in your payroll records.
- Unexplained changes to payroll records.
- Multiple employees who list the asme address or bank account details.
- Unexpected payroll emails you didn’t submit.
3. Proprietary data and intellectual property fraud
Many businesses deal with sensitive information, customer data, and intellectual property. Using or sharing that information in an unethical way — like giving it to competitors or using it to invest – can cost your company millions.
In one of the most famous examples, Tesla sued rival electric car manufacturer Rivian. The suit claimed that Rivian poached nearly 70 Tesla employees and encouraged them to steal confidential information before leaving [*].
Warning signs of proprietary data and IP fraud:
- Employees leaving for competitors (or to start their own competing business).
- Security breaches in your supply chain.
- Data breaches that target your intellectual property or patents.
- Employees requesting access to sensitive documents they don’t need.
4. Accounting and invoice fraud
Not every business fraud example is an in-depth or complicated scheme. Invoice fraud is when someone bills for goods or services the business never bought or masks personal expenses as company ones.
In one example, the State of California’s Department of Public Health discovered that a state employee spent $185,000 at Disneyland and passed it off as legitimate expenses [*].
Warning signs of accounting fraud:
- Unexplained expenses on company credit cards or bank statements.
- Accounting departments being protective of their records.
- Payments going to contractors you don’t recognize.
- Incomplete travel expenses or ones that don’t match up to their work schedule.
5. Retail fraud (Counterfeit payments and return fraud)
Retail businesses face their own unique fraud risks (beyond shoplifters). Here are a few examples of fraud that retail businesses should look out for:
- Counterfeit payments. If you deal in cash or checks, customers can use fraudulent payment types and scam you into giving your goods and services away for free.
- Prepaid shipping labels. A common scam targeting online business or individual sellers is to send a prepaid shipping label. Once you send the item, the buyer reroutes the delivery and claims they never received the package. This is an especially common scam if you sell on places like Facebook Marketplace.
- Return fraud. Scammers can take advantage of your return policy in a few ways. They could return stolen merchandise for cash or credit. Return differently priced but similar looking items. Or, use stolen receipts to return merchandise for a profit.
- Employee fraud. Retail workers have access to cash drawers, e-commerce payment systems, and other places that are vulnerable to fraud.
Warning signs of retail fraud:
- Excessive returns or chargebacks on purchases.
- Cash drawers are consistently under or always correct (inside fraudsters may be overzealous in covering their tracks).
- Buyers requesting to use their own shipping methods.
- Large payments in cash or checks.
6. Bribery and corruption
Bribery covers a wide range of frauds in which deals and contracts are made based on money and influence instead of merit or price.
Some examples include providers who pay bribes to get lucrative contracts, employees who give managers kickbacks in return for raises, or hiring managers who pick friends over more qualified candidates.
Warning signs of bribery and corruption:
- Unnecessary or inappropriate purchases.
- Questionable invoices without supporting documentation.
- Managers who continually accept poor performance or quality.
- Clear conflicts of interest.
7. Asset misappropriation, misuse, or theft
Criminals and fraudsters will try to treat your business as their personal bank account. Your assets – both cash and products – can be misappropriated, misused, or stolen.
These frauds could be as simple as someone stealing your products or using a work vehicle for personal errands. Or, they can be more advanced embezzlement schemes where workers skim millions from company accounts.
In one example, the former head of a Michigan-based charity used more than $250,000 in donations to pay for car repairs, mortgage payments, and personal credit card bills [*].
Warning signs of asset misappropriation:
- Unexplained budget overruns or spending in a particular area.
- Employees suddenly showing signs of financial gain with no explanation.
- Duplicate payments being made to vendors.
- Missing inventory.
8. Workers compensation fraud
Both individuals and businesses can commit insurance fraud. Workers can make fraudulent claims while working another job or fake an injury to take time off. While businesses can misrepresent their payroll to avoid high premiums.
The Coalition Against Insurance Fraud estimates there are more than $80 billion in fraudulent insurance claims made each year [*].
Warning signs of worker’s compensation fraud:
- Incidents are reported immediately before or after a strike, termination, or other employment change.
- Conflicting descriptions about what happened or no reliable witnesses.
- Employees delay reporting claims with no explanation.
- Claimants refuse normal treatments.
9. Financial statement fraud
Manipulating and making false claims on financial statements is most common for publicly traded companies or those looking for investors. A company can attempt to fool investors or the public by falsifying or hiding liabilities on financial reports.
One of the biggest examples of financial statement fraud was Theranos – the overhyped blood analysis startup. In 2014, Theranos’ founder told investors the company was on track to generate over $100 million in revenue. In truth, it made little more than $100,000 [*].
Often, only a small group of people know about the lies, and only a whistleblower can alert the public.
Warning signs of financial statement fraud:
- Revenue that doesn’t exist or is recorded before it’s actually earned.
- Over or undercounting inventory.
- Shifting current expenses or revenue to other quarters (“Cookie jar accounting”).
10. Business tax fraud
Businesses can underreport income, overreport expenses, or otherwise try to evade taxes. While there are legitimate ways to reduce taxes, methods that involve falsehoods are considered fraud.
For example, in 2017, two men were sentenced to 3 years in prison and ordered to repay over $6 million after they faked tax records at Hope Medical Park Hospital [*].
Warning signs of business tax fraud:
- Disorganized tax documents and books.
- Maintaining multiple sets of different tax records.
- Claiming tax deductions that are substantially overstated.
- Inventing or overstating expenses.
Are You the Victim of Fraud? Do This ASAP.
Fraud is an emotional crime as much as a financial one. It can feel embarrassing to admit you were tricked or scammed. But if any of these examples of fraud sound familiar, act fast and follow these steps:
- Call your bank and credit card company if you’ve been the victim of financial fraud. They’ll shut down your accounts and help you get set up with new ones.
- Place a fraud alert with any of the three credit bureaus and consider freezing your credit for added security.
- If your identity has been stolen, file an identity theft report with the FTC at identitytheft.gov.
- Contact your local law enforcement and make a call to a federal anti-fraud hotline.
- Sign up for credit monitoring to protect your accounts and minimize further damage.
- Update all your passwords and enable multi-factor authentication (MFA) with an authenticator app. If a fraudster has access to one of your online accounts, they probably have access to more.
- Scan all your devices for malware and install antivirus software.
- Finally, follow these 45 fraud prevention tips to protect yourself from future fraud.
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