introduction to fraud
Fraud can happen to anyone! Fraud occurs when someone or something tries to deceive or trick a person for their gain or to deprive the victim of a legal right. There are many types of financial fraud, including fake check schemes, phony jobs and lenders, money miles, online classified ads.
COMMON EXAMPLES OF FRAUD
Fraudulent Payments (Fake Check Schemes)
The Federal Trade Commission (FTC) estimates consumers lost over $3.3 billion to fraud in 2020 alone.* People of all ages fall victim to these scams. Nearly $1.2 billion of losses reported last year were due to imposter scams, while online shopping accounted for about $246 million in reported losses from consumers.**
There are many variations of the fraudulent payment scam, but there’s a typical pattern. Someone gives you money (via an electronic payment, check, or money order) and then asks you to send cash in return. When it eventually becomes clear that their payment is fraudulent, you are responsible for the money you sent them. Examples of this scam include:
A company promises you easy money working at home. They ask you to help them by accepting a payment and sending them money (minus your pay) via an electronic payment or money order.
You advertised an item for sale and the buyer “accidentally” sends you more than the price. The buyer then asks you to deposit their payment and send them the extra amount.
A special someone you’ve met online promises to come to the U.S. to be with you. They ask you to send them money directly or to deposit their check or money order and send them the cash to cover their travel expenses.
*Federal Trade Commission (2021): https://www.ftc.gov/news-events/press-releases/2021/02/new-data-shows-ftc-received-2-2-million-fraud-reports-consumers
You receive a notice that the lender who collects your mortgage payment has sold or transferred your service to another lender. The notice is fake and you start sending your mortgage payments to a phony lender.
Remember, in most cases, your current services must notify you in writing at least 15 days before any such transfer. A “goodbye letter” should include all of the contact information, new loan number, and start date for the new servicer.
Contact your original lender to confirm that the transfer of service is legitimate. Generally, you will also get a notice from the new servicer confirming the details of the transfer.
Criminals try to contact and defraud potential victims using various means. Once they contact potential victims, they use compelling language and scenarios to scam them. If you’re involved in a situation that matches one of the following descriptions, it could be a scam and you should contact your bank immediately:
Older adults can be at increased risk of being taken advantage of by family, friends, or strangers.
Remember, if it sounds too good to be true, it probably is.
If you become a victim of fraud, there is no reason to be embarrassed. There are many resources out there to help you get through the cleanup process.
Visit these websites for information on how to protect yourself or a loved one financially.
- Federal Trade Commission – Agency dedicated to preventing consumer fraud ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357)
- Fakechecks.org – Website sponsored by the American Bankers Association and the U.S. Postal Service
- ScamBusters.org – Website dedicated to protecting consumers from scams
- United States Department of Justice – Government site with a focus on the Internet and telemarketing
- FDIC – Tips from the governmental agency that regulates U.S. banking
- National Consumers League Fraud Center – Information and tips for avoiding fraud
- Anti-Phishing Working Group – A global law enforcement association focused on eliminating fraud and identity theft
- Comptroller of the Currency – Consumer Protection News – Federal agency dedicated to a safe banking system
BANK POLICIES AND PROCEDURES
Financial institutions have policies to help protect you from fraud. Here are some processes and procedures they use to protect you:
ID Cards: When you make a transaction at the teller window, the teller will typically ask you to provide two forms of identification.
Teller: The teller may ask you specific questions about yourself to confirm your identity — in other words, to make sure that “you” are really “you”!
ATM/Debit card reader: You may be asked to swipe your ATM or debit card and enter your PIN while you’re standing at the teller window.
Check to deposit: When you make a deposit, you may have to wait a period of time before you can withdraw the money. Check with your bank to confirm their policies and procedures.
Note: If you plan to move, update the United States Postal Service and give your bank your new address. They’ll send you a notice at your “old” address to confirm you really made this request — not a criminal trying to steal your mail and identity.