International Fraud Awareness Week is observed globally in the third week of November. The aim is to raise awareness of fraud through fraud prevention campaigns and education. Merriam-Webster defines fraud as an intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right. Fraud is not limited to financial gains. It also includes identity theft, voter fraud, healthcare fraud and more. Education is the key to fraud prevention. To help bring awareness, USA.gov lists common scams/frauds:
Common Scams and Frauds
- COVID-19 Scams, Rumors & Price Gouging
- Identity theft when people post a photo of their vaccination card on social media – Don’t post a photo of your vaccination card online. Scammers can see and steal your name, birthdate, and other personal information.
- COVID-19 testing, vaccine and treatment scams – Be aware that scammers are targeting Medicare recipients. They’re offering COVID-19 testing in an attempt to steal personal information.
- Charity scams – Fake charities pop up during disasters. And scammers can also claim to be from real charities. Learn how to research charity claims and protect your money.
- Checks from the government – Scammers say they’re from the IRS or another government agency. They ask for your personal information or try to charge you fake fees for getting your stimulus check or offer you a way to get the money early.
- FDIC and banking – People pretend to call from the Federal Deposit Insurance Corporation (FDIC) or your bank. They say your bank account or your ability to get cash are in danger and ask for your personal information.
- Grandparent and military service member scams – A scammer pretends to be a grandchild or a military service member. They say they’re sick or in trouble because of the coronavirus. They contact you asking to wire them money to pay for fake medical or travel expenses.
- COVID-19 funeral assistance scam – Scammers pretend to be from FEMA’s COVID-19 Funeral Assistance Program and call to offer program registration to family members of people who have died from COVID-19. In this way, the scammers can steal the family members’ Social Security numbers and other forms of identification.
- Banking Scams
- Overpayment scams – Someone sends you a check, instructs you to deposit it in your bank account, and wire part of the money back to them. But the check was fake, so you’ll have to pay your bank the amount of the check, plus you’ll lose any money you wired.
- Unsolicited check fraud – A scammer sends you a check for no reason. If you cash it, you may be authorizing the purchase of items or signing up for a loan you didn’t ask for.
- Automatic withdrawals – A scam company sets up automatic withdrawals from your bank account to qualify for a free trial or to collect a prize.
- Phishing – You receive an email message that asks you to verify your bank account or debit card number.
- Telephone Scams
- Telephone scammers try to steal your money or personal information. Scams may come through phone calls from real people, robocalls, or text messages. Callers often make false promises, such as opportunities to buy products, invest your money, or receive free product trials. They may also offer you money through free grants and lotteries. Some scammers may call with threats of jail or lawsuits if you don’t pay them.
- Census-Related Fraud
- Census scams happen when someone pretends to work for the Census Bureau to steal your personal information.
- Government Grant Scams
- Government grant scammers try to get your money by guaranteeing you a grant for costs like college or home repairs. They ask for your checking account information. With it, they say they will “deposit the grant money into your account” or withdraw a “one-time processing fee.”
- In reality, government grants are rarely awarded to individuals. They usually go to state and local governments, universities and other organizations. The money is awarded to help pay for research and projects that will benefit the public.
- Investment Scams
- Investment scams promise high returns without financial risk.
- Lottery & Sweepstakes Scams
- Prize scammers try to get your money or personal information through fake lotteries, sweepstakes or other contests. Many claim that you’ve won a prize but must pay a fee to collect it. Others require you to provide personal information to enter a “contest.” These scams may reach you by postal mail, email, phone call, robocall, or text message.
- Charity Scams
- Some scammers take advantage of the public’s generosity. They especially take advantage of tragedies and disasters.
- Pyramid Schemes
- Pyramid schemes are scams that need a constant flow of new participants to keep them going. They are marketed as multi-level marketing programs or other types of legitimate businesses. They use new recruits’ “investments” to pay “profits” to those participating longer.
- Pyramid schemes collapse when they can’t recruit enough new participants to pay earlier investors. These scams always fail – it’s mathematically guaranteed.
- Ponzi Schemes
- A Ponzi scheme is a type of investment fraud.
- Ticket Scams
- Ticket selling scams happen when a scammer uses tickets as bait to steal your money. The scammer usually sells fake tickets, or you pay for a ticket, but never receive it. They are common when tickets for popular concerts, plays, and sporting events sell out.
Insurance Fraud:
One of the earliest documented cases of financial fraud dates back to the year 300 B.C. when a Greek merchant named Hegestratos took out a large insurance policy known as bottomry. The merchant borrowed money and agreed to pay it back with interest when the cargo—in this case, corn—was delivered. If the merchant refused to pay back the loan, the lender could claim the cargo and the boat used for its transportation. Hegestratos planned to sink his empty boat, keep the loan, and sell the corn. The plan failed, and he drowned trying to escape his crew and passengers when they caught him in the act.
Insurance is intended to make you whole again after a loss, not profit from it. Insurance fraud is a felony. Don’t do it. People who commit insurance fraud include:
- Organized criminals who steal large sums through fraudulent business activities.
- Professionals and technicians who inflate service costs or charge for services not rendered.
- Ordinary people who want to cover their deductible or view filing a claim as an opportunity to make a little money.
Below is a list of insurance lines more vulnerable to fraud:
- Healthcare Insurance
- Providers billing for services not rendered.
- Upcoding services and medical items (the provider submits a bill using a code that yields a higher payment than for the service or item that was actually rendered).
- Filing duplicate claims.
- Unbundling (billing in a fragmented fashion for tests or procedures that are required to be billed together at reduced cost).
- Performing excessive or unnecessary services and potentially offered kickbacks.
- Abuse and resale of legal narcotics and other prescription drugs.
- Workers’ Compensation Insurance
- Employers who misrepresent their payroll or the type of work carried out by their workers to pay lower premiums.
- Employers who apply for coverage under different names to foil attempts to recover monies owed on previous policies or to avoid detection of their poor claim record.
- Medical care providers who upcode or bill for procedures that were never performed.
- Auto Insurance
- A large portion of auto insurance fraud is due to omitting or misstating the following underwriting information:
- Unrecognized drivers.
- Underestimated mileage.
- Violations/accidents.
- False garaging to lower premiums.
- A large portion of auto insurance fraud is due to omitting or misstating the following underwriting information:
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