Identifying Types of Fraud



Fraud is a crime involving deception and misrepresentation to secure unfair or unlawful gain, or to deprive a victim of their legal right. This deception can come in many forms, from manufacturing counterfeit credit cards to making false claims to receive loans they wouldn't have received otherwise. According to a news study, fraud is estimated to have cost the UK around £193bn annually - This is around £3,000 per head of population. Unfortunately, no one is safe from being defrauded, but knowing about the various types of fraud and how to identify them, will help protect you and your finances. Here are some of the most common and not so common fraud types:
  • Telemarketing Fraud
  • Land Fraud
  • Home Improvement Fraud
  • Tax Fraud
  • Credit Card Fraud
  • Identity Theft/Fraud
  • Internet Fraud
  • Insurance Fraud
There are many types of fraud, many of which you will probably never come across, but it's always better to recognise them and stay safe.

Internet Fraud


Auction Fraud

With the internet ever evolving, for everything from photo-sharing to online banking, consumers are constantly having to learn how to deal with the potential for internet fraud. Internet fraud is one of the most common and highly encountered types of fraud. Internet fraud can be quite hard to detect if you don't know what you're looking for. The most common internet scam comes in the form of online auctions - misrepresented or undelivered goods. Online auction fraudsters have now resorted to trying to buy goods and claimed to be out of the country so 'will pay extra for it to be shipped to...', these fraudsters usually claim to make payment via PayPal and will pressure you to create an account so they can make the payment right away and have you ship the item as soon as possible. Be sure to take the necessary step to avoid becoming the victim of online auction fraud:

  • Learn about your potential seller/buyer through your conversations - A legitimate buyer/seller wouldn't mind answering a few questions of curiosity.
  • Read any and all feedback the seller/buyer has, sites now allow you to rate and leave comments on seller/buyer profiles for others to see.
  • Check the location of your seller/buyer, as mentioned, "I'm currently abroad" crops up a lot and if they truly are out of the country then problems that may arise are harder to solve.
  • Ask about shipping and delivery if not already mentioned, you don't want to get stuck with a random shipping bill.
  • Do not give out too much personal information, many scammers will ask for photos of your drivers licence to prove "You're not a scammer".
  • If I doubt, back out. Simple, if you doubt the seller/buyer just back out of the deal and no one loses out.
To report Internet fraud you can visit ActionFraud and use the 'Report Fraud' button in which you'll receive a Police crime reference number.

Click Fraud

Click fraud exploits Google PPC (Pay-Per-Click). PPC is one of the most popular way of driving traffic and advertising to reach customers online. PPC is exactly that! You pay every time your link gets clicked, this has led to competitors of your business or anyone that may profit some way or another using this to their advantage. Click fraud can occur in both human and automated ways, for example, companies can commit click fraud by hiring low-cost employees in other countries to click on ad or text links to increase the revenue for publishing sites. Alternatively, competitors can hire bots or employees to click the links of your own company, thus, putting you out of pocket by depleting the marketing budget you set in place while also distorting search engine results. The jump in fraud rates is largely attributed to "botnets" or software robots used to sabotage people's computers to send out spam, commit identity theft, go phishing etc and in this example. to continually click a link or ad on a certain page.

Many business owners don't know what to do about this, and after a few attempts at complaining to the search engines they give up. Google has however changed their campaign to Pay-Per-Action, this means that a predefined action is required for the business to be charged for that click, this could be anything from signing up to buying an item. Search engines have made refunds for fraudulent clicks to companies that voices their opinion and concern.

Any of these Cyber Crimes can be punished seriously because it causes a lot of damage to businesses and the actual punishment should depend on the type of fraud used.


Land Fraud


Land fraud or real estate fraud is one of the less common and least encounter fraud types, yet it's still out there threatening home buyers. The fraudsters pose as trustworthy estate agents looking to provide you with your dream home in the sun! Sounds great, so you go for it, that deal isn't one you want to miss! But in reality you've purchased a run down home, far from conveniences, recreation and everything else. So before making an investment it's useful to take a look around the land or house to ensure everything is as mentioned and make sure that you're not getting nothing in return for your money. Con artists have also posed as the 'real' home owner, along with some fake documents to obtain your own personal details in order to 'transfer the property', which doesn't even belong in their name. When buying a home the main things to keep in mind are:

  • Be mindful, if it sounds too good to be true, it's probably too good to be true. 
  • Look at the house and land thoroughly yourself and even think about bringing someone else to help inspect.
  • Obtain a property report and contact the relevant authorities to confirm all the details about the property.
  • Don't sign anything without reading what the document is.


Telemarketing Fraud


Fraudulent telemarketers make million (if not billions) per year by scamming innocent people into buying poor quality products or items that they'll either use once, or never actually see used. They often have great sales pitches, making promises that sounds amazing and will often mention such terms as; "One-Time offer", "Only available to you", "Free prizes/vacation if you sign up". These fraudsters will often target the elderly as they're often more polite and friendly towards unwanted phone calls. 

The tell-tale sign of a fraudster is that the offer they're pitching always sounds far too good to be true, they'll urge you to act now and make a decision and often won't take 'No' for an answer unless they know they've been busted. They request bank details and credit card information that they have no need for when selling their products. remember to look out for the following when dealing with unknown/random telemarketing calls:

  • Decision: A fraudulent telemarketer will need a decision right away, if the call is from a legitimate company, they'll be happy to phone back another time or even at the time your request. Many fraudsters will mention the above phrases of "It'll be gone soon", "This deal is just for you", all trying to make you rush your decision and make a purchase.
  • Pressuring you: Legitimate telemarketers will accept your 'No thank you' and be happy to move onto their next call for the day, after all it's their job to make those phone calls and if someone's not interested they may as well move one and look for a sale elsewhere. A fraudulent caller will mention the deal being the best thing for you and won't accept 'No thank you', often having an answer for all of your questions and replies. Just hang up the phone, without being rude if you suspect a fraudulent call.
  • Personal Information to verify: Any legitimate telemarketer isn't going to need your bank details, drivers licence or any other kind of personal info, they're simply making a sales pitch and will only require further info once you have decided to make a purchase, in which you'll likely be passed onto the team or person dealing with this. A fraudster will often ask for personal information to confirm your identity, if this happens hang up and block the number.

Home Improvement Fraud


Home improvement or repair fraud is quite common in smaller, elderly neighbourhoods, the large sums of money involved in home improvement makes it an attraction to your typical fraudster. The number one alarm for these fraudsters are leaflets and mail offering a service much much cheaper than all other companies, the other companies prices are likely to be in the same ball park, but way above your fraudulent offer. With home improvement you often pay half the agreed sum in advance and then in small instalments as the job is completed, this may provide you with the answer as to why the company could offer such a low price, their work may be bad or they may leave the job once they have received a substantial payment, leaving you with a half finished, unsafe structure and the contact details they leave return nothing but a blank dial tone. Another verification to this scam is a 'free inspection' in which you'll find the fraudster will rack up a huge list of repairs that you "need", which in reality you don't need. A few simple precautions you can take are;

  • Get a few quotes from various companies and compare them, you'll find many in the same region, perhaps saving a few hundred with the better company. Fraudulent companies will often come back with a price that saves you thousands. Always ask if the company offer free inspections for quotes before booking an appointment.
  • Take note of the sales person's name and the address of the company they work for - this is all information that a legitimate company is happy to share.
  • Ask for an references from the firm, they'll surely have a few happy customers if they're a real business.
  • Look at your contract, this is a simple precaution yet is such an easy mistake to make. Always read the contract, looking out for completion dates and costs before even touching the pen!
  • Try to avoid paying with cash, pay via check or money order. If they won't accept a cheque it's usually because they don't have a bank account in the name they originally gave you.

Tax Fraud


Every country requires working people to fill out a tax return every year when required, to determine the amount of tax we owe to the government, anything you lie about on these is automatically tax fraud. A small percentage of people often purposely try to misrepresent their income in order to pay less tax than they originally should be. If you violate the tax law by misrepresenting your income or changing numbers to avoid paying taxes, you will most likely be committing tax fraud. Any of the following are examples of ways you can commit tax fraud:

  • Claiming false deductions
  • Concealing or transferring assets or income
  • Knowingly changing your income
  • Over reporting the amount of deductions
  • Possessing two sets of books
  • Recording personal expenses as business expenses
  • Using false amounts on books and records
If you suspect that someone you know is violating tax laws you can report it by visiting Gov.uk

Credit Card Fraud


Credit Card fraud is becoming more and more common as years go by, statistics show that credit card fraud can cost consumers up to £300 million per year. As technology advances, the fraudsters come up with ever increasing sophisticated ways to steal your personal information. Despite all the security surrounding your credit cards, many people are unsure how to protect their information, so it's always important to know how to prevent credit card fraud and you know how to report it, should it ever happen to you. Credit card fraud can fall into a number of categories:

  • Counterfeit Credit Cards: Making up around 40-50% of all funds lost through credit card frauds. To make fake cards criminals use the newest technology to "skim" information contained on magnetic strips of cards and to pass security features such as holograms.
  • Lost or Stolen Cards: Cards stolen from the real cardholders or lost by them account for around 20-30% of all card frauds that occur. These cards are usually acquired in public places, like gyms, workplaces and even unattended vehicles.
  • No-Card Fraud: This type of card fraud often comes hand in hand with telemarketing fraud, the criminal doesn't actually need your card in hand because you've supplied them with the details via a phone call, email or some other form of contact without knowing. This type of fraud makes up around 10% of all card fraud.
  • Non-Receipt Fraud: This type of card fraud is decreasing as years go by due to the steps taken by card issuers, accounting for around 7% of all card fraud. The criminals would acquire your card before it gets to your door in the mail, leaving you waiting for your card, when it's already been delivered. card issuers have recently started using a 2-step activation for cards to stop this from happening. In 1990's, non-receipt fraud made up around 20% of all card fraud.
  • Identity Theft Fraud: Identity fraud is one of the least common types of card fraud, it occurs when the fraudster applies for a credit card using someone else's identity and information.
Now that you know the different ways card fraud can happen it's a good idea to take steps to prevent this ever happening to you:

  • Sign the back of your card
  • Keep track of your card, when using it make sure you know you've picked it up again. Keep it safe in your wallet and keep your wallet safe in your pocket.
  • Keep all receipts when using your credit card, these can be sued to back up any charges appearing on your statement.
  • Always check your statement, ensure you know each transaction was your own and always report bogus charges, sometime fraudsters will take a few pence, this tells them that there's money available and will likely go un noticed by someone that isn't checking.
  • Call your card issuer straight away if your card goes missing, cancel it and order a new one.
  • Refuse to give out card information on the phone unless you are 100% that the person on the other end is a legitimate trustworthy merchant.
  • Check that your on a secure website before making an online transaction.
  • Ignore emails that ask you to provide your credit card number or details via email.
  • Avoid 'phishing' scams by deleting any and all emails that require personal details as verification.
  • Don't lend you card out. This might seem obvious but you'd be surprised how often it happens!
If despite taking all the necessary precautions you find yourself a victim of credit card fraud, you should where to report it and prevent it happening to anyone else, always report any unusual activity to your card issuer. You can report the fraud through ActionFraud.

Insurance Fraud


Insurance fraud is a false claim made for financial gain, this may be misrepresenting information to collect money that they wouldn't be entitled to otherwise. But, it's not always the consumer defrauding the company, sometimes the company can defraud the consumer by denying them benefits that they're rightly entitled to. All insurance fraud can be sorted into two section: 'soft' & 'hard' fraud.

Hard Fraud

Hard fraud includes things like staging a car accident, injury, loss etc to illegally receive money from their insurance company. This type of fraud is often the type you see in news and is easier to identify and detect. Hard fraud is usually committed by large criminal organisations with the intention of gaining millions out of insurance companies, but can as with all fraud be committed by the average person.

Soft Fraud

Soft fraud is a lot more difficult to detect. It happens when a person tell a "White lie", such as, 'I'm too ill to come into work', this means they still receive pay but don't have to come into work even though they are more than able to. This is the most frequent and one of the most expensive types of soft fraud committed. This has resulted in insurance premiums rising over recent years. 


Identity Fraud/Theft


Identity theft is a very serious crime that affects millions of people every year and accounts for the loss of $221 billion per year worldwide (According to the Aberdeen group). Identity theft occurs when someone gains access to all your personally identifying information - Like your name, credit card information, D.O.B, NI number (or social security number) to pretend to be you. This is fraud and can leave the victim with bad credit reports, or even warrants for their arrest depending on what your thief chooses to do with your information. The reason fraudsters do this is for personal gain, perhaps they have bad credit and so open credit accounts in your name, gain a drivers licence in your name with their picture, this means the information would look legitimate but all fees, charges etc would come back to you not the thief. Some fraudsters even sell your personal information on for others to use. There are a number of ways your personal information can get into the wrong hands:

  • Rubbish Diving: Going through your rubbish to look for statements, bills etc that include your name and personal info. 
  • Stealing: The thief may just straight up steal your purse or wallet, maybe even steal your mail once it's delivered, this gives them personal information such as names, addresses and any other personal information that might be included with the stolen items.
  • Changing your address: The fraudster may file a address change, diverting your mail to an address they can easily access your info at.
  • Skimming: This is one of the more advanced methods, using a storage device to skim and store your credit or debit card numbers when you use your card, these are often fitted to card slots on cash machines.
Sometimes identity theft can go unnoticed by the victim, with around 40-60% of victims noticing it within the first 3 months of it starting, compared to the other 20-40% that can take up to 4 years or longer before noticing the use of their information. After this amount of time, restoring your identity and repairing any damage done can take multiple weeks and in some cases longer than that. On average it takes a victim 330 hours (Around two weeks) to repair the damage caused, while almost 35% of victims spend a period of 4-8 months dealing with the case and in very serious cases around 20% can spend up to a year dealing with the major set-backs and consequences. 

The only way to protect yourself against identity theft is to be more vigilant about who has access to your personal information, shred all documents before disposal (Some criminals will actually piece your documents back together - so consider a professional company or burning the documents yourself). Always keep passwords, cards and pins safe and ensure you never reveal these to others.

There are a number of clues that someone may be committing identity fraud using your information, these are as such:

  • Statements contain purchases and withdrawals you didn't authorise or make: Someone may have gotten access to your account information and may now be using this to gain credit and use your accounts as their own. Contact the bank or credit card company the account holder is under, also get a copy of your credit score.
  • Receiving cards you didn't apply for: If you receive a credit card that you know you didn't apply for, someone may be using your information to gain credit in your name. Phone the credit issuer and get information about the account - when it was applied for being the main piece of info you will need. If the card is not pre-approved then someone is committing credit fraud using your identity.
  • You no longer receive bank statements etc: Someone may have stolen your statements and had your mail redirected to their own accessible address to prevent you from noticing the transactions etc on your accounts.
  • You get arrested for a crime you didn't commit: Chances are if you know you didn't do anything wrong but find yourself in cuffs, then someone may have used your information to make an ID with their picture, ask the police for more information and have then check the ID image.
There are plenty of other things to look out for but these are the most common ones and probably the only ones you'll need to look out for. If you find yourself a victim of identity theft, be sure to contact all credit reporting agencies: Equifax, Noddle, Experian, MoneyAdviceService etc and have them put a 'Fraud Notice' on your credit file and include a victim's statement asking all creditors to call you on the given number before allowing any accounts to be opened or changed, these reports do however expire, so always be sure to ask about the companies renewal policy. Contact all companies that you have an account with that has been tampered with, changed or recently opened in your name and ask the accounts be closed due to fraud (This will require some paperwork but it'll be worth it). You might also need to put in place a stop-payment order which will stop payments being made using fraudulent cheques. be sure to change all pins, passwords and even request new cards etc. You are not required to cover any costs as a result of identity theft, do not make any payments to companies pressuring you to make payment for these fraudulent activities.

File a police report with your local police or the police in the area that the theft occurred. Get a copy of your police report in order to give these to creditors, banks and any companies that you may now have fraudulent accounts with, this will help you when trying to report fraudulent debt disputes etc. Try to be as thorough as you can with providing details about the theft, provide all documentation that you may have, whether this be debt collection letters or bank statements with incorrect transactions.

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