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Several Forms Of Fraud And How To Recognize Them

Posted By on 02-03-2021
Several Forms Of Fraud And How To Recognize Them

There are many types of fraud and one way to combat this ever increasing crime is through education, which will help honest people understand how these scams work and teach them what to do when they suspect they’re being targeted by criminals.

Fraud occurs in many forms and is a costly crime, and the best way to deal with the problem is for everyone to understand how fraudsters pull their scams so we can work together to prevent this from happening.

It most certainly occurs in the insurance industry and through experience we believe that the first and perhaps most imprtant step in combating the crime is through education. If we help the people who are the targets of fraudsters by showing them how these criminals work we can hopefully prevent innocent parties from becoming a victim.

4 Common Ways Fraudsters Target Innocent People

 (1) Phishing

Phishing is just like it sounds, where fraudsters put out a line and some bait on a hook. It can be as simple as an email that looks and sounds legitimate, but of course isn’t.

The message might look like it comes from a bank or a service provider or even a fellow employee or someone close to you. If you take the bait, you are redirected to a website that looks normal but that is in fact a copy made by malicious persons.

Thinking that you are on a real website, your guard is down and unsuspicious when they ask for personal information such as your login information, password, account number or social insurance number. Once you provide your personal information, criminals will then use it to commit fraud.

(2) Emergency Scam – a.k.a. The Grandparent Scam

Fraudsters send an email or make a call to someone claiming to be a friend or relative in urgent need of cash to get out of trouble! Anyone can be targeted by an emergency scam but many scammers will prey on vulnerable seniors, often pretending to be grandchildren and making up stories that sound very credible and require urgent action to get out of trouble. To add further complications, the “grandchild” will insist on keeping this a secret so that their parents don’t find out, allowing the possibility of further victimization if the fraud scheme works.

Money sent through a money transfer service, pre-paid gift or credit cards or even in bitcoins, is difficult to trace or recover.

(3) Wire Fraud – Supplier Swindles – CEO Scams

Wire fraud cost Canadians millions of dollars every year and is one of the more serious scams. This form of fraud typically targets businesses and institutions using a few methods, including the “supplier swindle” and the “CEO scam”.

For example, an employee receives an email from a high-ranking executive, perhaps the CEO, telling an employee that they need to transfer money quickly in order to close an important transaction. In another case, an employee might receive an email from a trusted supplier stating that an order has not been paid or that their account information or banking details have changed. The employee is then requested to send payments to the new accounts owned by fraudsters.

This crime can be quite sophisticated, as scammers use social media and websites to gather information, as well as copy company logos and banners so that the emails they send appear totally legitimate.

(4) Extortion scams

Extortion is, by definition, the practice of obtaining something, especially money, through force or threats. Scammers will use every trick in the book to persuade you to give up money but it can also involve the surrender of services or property.

Contact can be initiated through phone calls, text messages, emails or social media direct messaging. Threats can be used, including those against you, your family, your property or your reputation and often you are left with the only option of complying. Payment demands can be in the form of money but also e-transfers, gift cards, pre-paid credit cards or even cryptocurrencies like bitcoins are possible.

Extortion and fraud are serious criminal offences but they can be prevented if people learn how to recognize them and follow specific protocols and procedures. You can find some recommendations on hwo to prevent fraud in some of other posts in the BlueCircle Insurance Blog.

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