Last Updated on by SCARS Editorial Team

Financial FraudFraud In law, fraud is intentional deception to secure unfair or unlawful gain (money or other assets), or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compensation) or criminal law (e.g., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities), or it may cause no loss of money, property, or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements. A fraud can also be a hoax, which is a distinct concept that involves deliberate deception without the intention of gain or of materially damaging or depriving a victim.: Explained

A SCARSSCARS SCARS - Society of Citizens Against Relationship Scams Inc. A government registered crime victims' assistance & crime prevention nonprofit organization based in Miami, Florida, U.S.A. SCARS supports the victims of scams worldwide and through its partners in more than 60 countries around the world. Incorporated in 2015, its team has 30 years of continuous experience educating and supporting scam victims. Visit www.AgainstScams.org to learn more about SCARS. Guide Based Upon FINRA Information

2020 Edition

All fraud uses deception to enrich the fraudsters. In the case of financial fraud, deception and misrepresentation are used in conjunction with financial products, investments, or personal assets such as a house.

While financial fraud encompasses a wide range of illegal behaviorBehavior   Behavior / Behavioral Actions Otherwise known as habits, behavior or behavioral actions are strategies to help prevent online exploitation that target behavior, such as social engineering of victims. Changing your behavior is the ONLY effective means to reduce or prevent scams., our focus is on frauds that primarily target individuals: Ponzi schemesPonzi Schemes A Ponzi scheme is a type of investment fraud. Use this information to identify, report, and protect yourself against this type of scam., mortgage fraud, advance-fee schemes, relationship scamsScams A Scam is a confidence trick - a crime -  is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost., and credit card theft are all-too-common examples.

Definitions:

In this article we are going to use certain terms interchangeably. Fraud is the same as ScamScam A Scam is a confidence trick - a crime -  is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost.. FraudsterFraudster A Scammer or Fraudster is someone that engages in deception to obtain money or achieve another objective. They are criminals that attempt to deceive a victim into sending more or performing some other activity that benefits the scammer. is the same as ScammerScammer A Scammer or Fraudster is someone that engages in deception to obtain money or achieve another objective. They are criminals that attempt to deceive a victim into sending more or performing some other activity that benefits the scammer..

Basics

While the actual fraud varies, a similar set of tactics is used to separate victims from their money, including:

  • gaining victims’ trust and confidence to gain money;
  • using false information to induce victims to invest in or purchase products that don’t exist; or
  • stealing identifying information.

A BIG PROBLEM

Obtaining an accurate estimate of fraud prevalence has been hindered by a number of factors. Estimates vary, sometimes widely, due to inconsistent definitions of fraud, differences in the types of fraud examined and the populations studied, underreporting of fraud, and the method used to measure fraud, such as law enforcement records or surveys. Prevalence estimates need to be considered in this context.

11-15% of U.S. Population Have Reported*

 

Recent studies estimate that between 11 and 15 percent of the population are self-reported victims of financial fraud. A Federal Trade Commission report from 2013 estimated 25.6 million people were victims of one or more