What is Fraud?
Fraud is a crime that occurs when a person uses deception in order to obtain someone else’s personal or financial assets. Being a victim of fraud can have serious consequences, but the impacts can be lessened if you are aware of what is out there and know how to identify scams.
There are several types of fraud, including:
- Investment Fraud
- Bank Fraud
- Internet Fraud
- Identity Theft
- Insurance Fraud
Investment Fraud (also known as securities or stock market fraud) convinces investors to make purchase or sale decisions based upon false or misleading information. This can cause the investor to loose large amounts of money. The “Ponzi scheme” is one of the most common schemes when dealing with Investment Fraud. It is named after Charles Ponzi, a man who became well-known for his fraud technique in 1920. The Ponzi scheme occurs when investors are promised exceptionally high financial returns or dividends. What the investors don’t know is that these returns are coming out of their own pocket, rather than a profit.
Bank Fraud is when someone using deception to obtain a person’s money that is in the hands of a financial institution. Sometimes the fraudster will pose as a worker for a financial institution and ask for the victim’s account information which they will then use to gain access to their accounts. Bank fraud also includes theft of your credit card and forging, cashing and counterfeiting cheques. Bank Fraud is often referred to as a “white collar crime.”
As technology continues to evolve, the internet is now being used as a medium for deception and the relaying of false information in order to perform fraudulent transactions.
Identity Theft is a crime that occurs when someone else gains access to your personal information and uses it to assume your identity. They then use this to commit fraudulent offenses such as applying for credit cards or purchasing expensive items. See “Identity Theft” page for more information on this topic and how to protect yourself against this certain type of fraud.
Insurance Fraud is when a consumer lies in order to obtain some benefit that they are not actually entitled to, or when an insurer lies to the consumer, denying them of a benefit that they are entitled to. This can be done with insurance regarding health, home, automobile, life, etc. When talking about Insurance Fraud, there are often two types that are mentioned; soft and hard fraud. Soft fraud is when consumers tell “white lies to get the benefit they are seeking from their insurance companies. Hard fraud is when consumers go to extreme measures such as staging a car accident, injury, break-in, arson, loss, etc. to collect benefits from their insurers.
When dealing with fraud, there are a number of deceptive schemes that often occur. Below are some of the most common schemes that you should be aware of:
- Fake Charities
- Telemarketing Scams
- Job Scams
- Contest Scams
Phishing is when someone contacts you, claiming to be from a recognized company. They state that they need your personal information for some reason, perhaps something has gone wrong with your online account or that they need certain information in order to process something.
Remember, if the company is legitimate, they will not ask for your personal information online or over the phone!
Sometimes you think you are being a good civilian by donating a sum of money to a worthy charity. What you may not know is that the “charity” to whom you are donating to. is simply a scammer, tricking you into giving them your money. If you are contacted by a charity and you wish to make a donation, ask them to mail you a pledge form instead of giving them your personal information over the internet or phone.
Many people are looking for jobs these days and some don’t think twice when they are offered one. What you need to be aware of is that there are scams out there where someone will claim to be a potential employer. The job position usually only requires you to do small jobs here or there but the employer will need your financial information in order to set up payment transactions. They will use this information to actually take money from you, rather than give it to you.
Often times people receive calls or e-mail claiming that we’ve won a terrific prize like a cruise vacation or luxury trip. The caller will claim that they need some financial information in order for them to give your prize. If you receive a call like this, think back and look for proof that you had entered that exact contest at some point. Also, never give out your financial information over the internet or phone. If it something seems to good to be true, it probably is.
- If you are the unfortunate victim of fraud, there can be severe consequences. Below are some preventative measures that you can take in hopes of protecting yourself against fraud.
- Ask questions when someone claims that they need your personal information and never give it out unless you know exactly who you are dealing with.
- Shield your PIN number whenever you are required to enter it.
- Cancel accounts immediately if any cards have been lost or stolen.
- Monitor your billing cycle regularly to make sure no bills have been redirected.
- Collect your mail as soon as possible and notify your local post office if you are going out of town. By doing this, they can hold it for you until you return.
- Install security software on your computer and update it regularly.
- Change your internet passwords often and make them difficult to guess.
- Shred receipts or any documents contacting account information
- Access a credit report at least once a year to check for any unusual activity.
- Do not carry your social insurance card in your wallet.
If you are a victim, report it to your local police agency, as well as the Canadian Anti-Fraud Centre (1-888-485-8501).