Thousands of people each year fall victim to fraudulent acts -- often unknowingly. While many instances of fraud go undetected, learning how to spot the warning signs early on may help save you time and money in the long run.
Fraud is a broad term that refers to a variety of offenses involving dishonesty or "fraudulent acts". In essence, fraud is the intentional deception of a person or entity by another made for monetary or personal gain.
Fraud offenses always include some sort of false statement, misrepresentation, or deceitful conduct. The main purpose of fraud is to gain something of value (usually money or property) by misleading or deceiving someone into thinking something which the fraud perpetrator knows to be false. While not every instance of dishonesty is fraud, knowing the warning signs may help stop someone from gaining any unfair advantage over your personal, financial, or business affairs.
What the Law Says About Fraud
Laws against fraud vary from state to state, and can be criminal or civil in nature. Criminal fraud requires criminal intent on the part of the perpetrator, and is punishable by fines or imprisonment. Civil fraud, on the other hand, applies more broadly to circumstances where bad-faith is usually involved, and where the penalties are meant to punish the perpetrator and put the victim back in the same position before the fraud took place.
While the exact wording of fraud charges varies among state and federal laws. the essential elements needed to prove a fraud claim in general include: (1) a misrepresentation of a material fact; (2) by a person or entity who knows or believes it to be false; (3) to a person or entity who justifiably relies on the misrepresentation; and (4) actual injury or loss resulting from his or her reliance.
Most states require that each element be proven with "particularity" -- meaning that each and every element must be separately proven for a fraud charge to stand.
Types of Fraud
There are many types of fraud offenses, several of which occur through the mail, internet, phone, or by wire. Common types include:
- bankruptcy fraud
- tax fraud (a.k.a. tax evasion)
- Identity theft
- insurance fraud
- mail fraud
- credit/debit card fraud
- securities fraud
- telemarketing fraud
- wire fraud
Warnings Signs of Fraud -- What to Look Out For
The warnings signs vary depending on the type of attempted fraud. For example, a warning sign for telemarketing fraud may include a phone call by an unknown caller asking you to "send money now" to receive an offer. Similarly, a warning sign for identity theft might be a call from someone asking for the digits of your social security number or last known address.
Other, more general, warning signs may include, receiving unsolicited mail requesting you to send money to a bogus account, losing your credit card or driver's license, and promises made by an individual or company that seem "too good to be true".
The practice of fraud is not always geared toward individuals. Business owners also need to look out for fraud perpetrators. Landlords, loan agents, and other small business owners should also be aware of potential warning signs, such as phony references, wrong phone numbers or address on applications, large purchases on bank card without regard to price, style of item, and so on. The golden rule in preventing potential fraud offenses is to be vigilant in handling your business and personal affairs.
Penalties for Fraud Offenses
Penalties for fraud offenses may include criminal penalties, civil penalties, or both. Most criminal fraud offenses are considered felony crimes and are punishable by jail, fines, probation, or all of the above. Civil penalties may include restitution (paying the person back) or payment of substantial fines (geared to punish the behavior). The penalties for your offense will depend on the nature, type, scope, and severity of the action and whether it was committed by an individual or an entity, such as a business, corporation or group.
What to Do If You Believe You Are a Victim of Fraud
Fraud does not discriminate. Any person, group, business, government, or entity can fall victim to fraud offenses. Oftentimes, fraud victims face a range of emotions, including anger and betrayal toward the perpetrator, shame or guilt, and/or fear and frustration over the loss of money or something of value. If you believe you are a victim of fraud, there are several national and local fraud victims' assistance organizations that may help you.
In many cases, fraud victims do not recover the actual money or property that was lost. However, if you would like to prevent identity theft, and other common fraud violations, you may need to hire a lawyer who knows about the nuances of the laws concerning fraud in your state.