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The main types of financial frauds and how to avoid them

New IdentityTheft Scam

Financial fraud takes many forms and it can largely be defined as the intentional act of deceiving an individual, with respect to financial transactions, for the personal gain of the deceiver. Some financial frauds involve complicated schemes while others simply rely on identity theft or stealing information off a credit card during a regular ATM withdrawal. Avoiding some of the most common types of financial frauds requires a certain degree of skepticism to “get-rich-quick deals” or sharing personal and bank details over social media or to suspicious online shops. In this article, we highlight the main types of financial frauds and for legal assistance you should contact an experienced theft solicitor.  

Identity theft

This is accomplished when an individual steals the personal information of another and impersonated him or her. Mail and e-mail fraud can be ways in which the criminal can attempt to find out the personal details and then use them for his/her personal gain. However, the schemes do not have to be complicated, it can be as easy as collecting mail or receipts and gathering some information that could allow them to claim benefits on your behalf. Destroying private documents, receipts and records as well as keeping your social security number safe and securing your e-mail account are some ways in which you can protect yourself against identity theft. 


In this case, a criminal poses as a regular service provider or the bank where the victim has his or her account opened. He/she then proceeds to request personal information. In order to prevent this, you can refrain from responding to suspicious requests, even if they are from your regular internet service provider or bank, for example. When in doubt, it is better to double check if the agency, bank, provider or the respective entity has indeed made the formal request.

Credit and debit card fraud

This is common on the internet, especially when the victim is naive or too eager to help a supposed friend in need or an urgent cause. Sharing bank details over social media is not recommended. If you do need to give information to a friend, you should at least confirm with him or her that he/she is indeed the one who sent the distressed message asking for financial aid. In real emergencies, you should try to contact that person via telephone to establish payment details.

Card skimming

This is done by tampering with the ATM so that the device will record the card PIN. You can make sure to check for signs of tampering, avoid ATMs that are located outside and always protect your card PIN. You can also make sure to report any suspicious transaction or activity. 

Investment schemes

Pyramid schemes and Ponzi-schemes are two of the most common ways in which financial criminals seek to obtain money from naive individuals. Investment schemes that promise a high return rate can be false and the money is not invested, but used by the criminals. 

Online fraud is also on the rise and more customers prefer online shopping. You can avoid online deals and investment schemes by exerting a reasonable amount of common sense. 

Protecting yourself from financial fraud requires paying attention to suspicious deals or individuals/companies requesting your personal information. By using a reasonable amount of care and reason, you can protect yourself from serious financial losses. 

Source: on 2019-03-27 14:45:00

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