HomeFinanceTwo Types of Financial Fraud

Two Types of Financial Fraud

The increase in online commerce and social media has made consumers more vulnerable to financial fraud. Scam artists set up a scheme to lure their victims in various ways to intentionally withhold factual information and provide a false, misleading narrative. They intend to gain substantial sums of money and will act without the victim’s knowledge. Schemers will do anything to conceal their involvement, making it difficult for legal authorities to prove anything happened. There are two common types of fraud you should know about.

Two Types of Financial Fraud

Identity Theft

Identity theft is the most dangerous type of fraud. The total losses resulting from identity theft are much higher than the amount of cases reported to the Federal Trade Commission. Through data mining, criminals will obtain your personal information that includes your name, phone number, address and social security number. By stealing your identity, they’re able to gain access to your bank account information. This includes your credit card number and total amount in savings. They could also sell your financial information in the dark web on secret websites. One example of identity theft is a rejected tax return that is legitimate, which the IRS will claim is as a copy. Taken to its greatest extent, scam artists could impersonate as a false individual with your identity to possibly commit future crimes.

Chargeback Theft

Also known as friendly fraud, a false chargeback occurs when a customer claims a refund from a legitimate purchase that was never cancelled. The merchant who provided the refund must pay a fee and may possibly suffer long-term revenue losses. Chargeback rates that exceed a specific monthly threshold results in a hefty fee of $10,000 for the merchant, whose account could be closed if new fines are added. Although it is possible to obtain merchant fraud protection, creating a dispute takes up the merchant’s resources they could use for future expenditures. Customers should be careful and thoughtful before making a particularly expensive purchase. If you demand a refund from a false chargeback, the merchant could take you to court and you could go to jail. Chargebacks should only be used if a customer makes an honest error, such as canceling a transaction made without the buyer’s knowledge.

Financial fraud is difficult for many customers to avoid. You should stay skeptical as a customer and pay attention to confidence tricks schemers use to reel in their victims. A criminal who commits identity theft creates a new, false identity using your personal information. Scheming customers demand a refund from a false chargeback and mislead merchants to obtain additional profits. Nevertheless, it’s important to protect yourself from these two common types of fraud.

I am Content Writer . I write Technology , Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. Linkedin


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