Different Types of Fraud & How To Protect Yourself

Whether we like it or not, fraud has become a prominent part of our technologically advanced society. Fraudsters are after either two things – your money or your identity, and sometimes both. Whether they hack your email account or obtain your Social Security number, fraudsters are smart, quick and are always trying to stay one step ahead. That’s why it’s so important for you to be educated on the different types of fraud and the ways these scam artists get ahold of your information.

Let’s take a look at all the different types of fraud out there, real-life examples and how you can protect yourself from falling for these scams.

Social Engineering

Social engineering is when fraudsters trick innocent consumers into divulging personal and confidential information. This includes their email and online account information, bank account information or computer network information. The fraudsters contact people, by phone, email or mail, posing as phony representatives from legitimate companies claiming there is a need to verify or provide their information. Fraudulent emails include the company logo, which make them appear even more real. This is called phishing.

You may have heard of some of these instances of phishing:

  • “Windows” calls about a virus on your computer and says they can fix it. You give them your computer information and they take over your computer.
  • You receive an email stating there is an issue with your account and you must verify your account information. It includes a link. You click the link, enter the requested personal details and your information is now compromised.
  • Robocalls tell you that your card is locked and require you to enter your PIN and card information into the phone’s keypad.
  • You receive a call regarding student loan forgiveness. Your student debt will be washed away once they verify your identity with your address and Social Security number. You provide it, and now your identity is at risk.

Card-based fraud

Fraudsters can use your credit card or debit card information to make purchases for themselves or send other people money.

There are many different ways fraudsters can obtain your card information and then use it to commit fraud:

  1. Skimmers. Skimmers are placed on ATM machines or at point-of-sale machines that can read and save your card information. According to PYMNTS.com, periscope skimmers are small and can go without being noticed, but can hold up to 32,000 card numbers and last 14 days on battery life. Popular locations for skimmers are gas stations and standalone ATMs, often located at convenient stores or outdoors attached to the side of a building.
  2. Counterfeit cards. Although EMV technology has made it more difficult to create fake credit or debit cards, counterfeit card fraud is still an issue. Fraudsters can take your card information (number, expiration date, CV code) and create a fake credit or debit card that they can then use. The information is still attached to your account, so it’s your money they are spending.
  3. Card not present. Fraudsters do not need a physical card in order to commit card-based fraud. They can also use your card information to make online purchases, where an in-hand card is not required. This type of fraud is now rising because it’s a loophole to get around EMV chip cards.

Additionally, a dishonest waiter or clerk may also write down your card number when you’re not looking. Fraudsters may also look through your mail or trash to find account numbers on statements.

Fake check scams

Not only can fraudsters create fake debit cards, they can also create counterfeit checks. Usually, the fraudster will send you a fake check for you to deposit and then require that you send them back a certain amount of money.

This is mostly common in:

  1. Job scams. You apply for a job where you can make easy money. “Your employer” sends you a paycheck in an amount more than it should be, then requires you to send the difference back to them after you deposit it.
  2. Fake lottery winning scams. You receive a check for lottery winnings that you didn’t apply for. You call the number and the representative tells you it’s legitimate and that you can deposit the check, but after you deposit the check, you must send back money for taxes and fees.
  3. Online sale scams (e.g. Craigslist or online yard sales). If you’re selling something online, a “buyer” might send you a check for more than the sale price and then he/she tells you that you must send the difference back to them.

The issue with each one of these instances is that each one of these checks will bounce, and not only are you responsible for paying the money back, but the money you sent the fraudster stays in their pockets and never comes back to yours.

Network/software-based fraud

These days, fraudsters are extremely sophisticated with computer technology and can use your computer in different ways to gain username and password information or even completely take over your computer.

  1. Malware. If you click on a link or pop-up that has been placed somewhere by a fraudster, they can then install malware or spyware on your computer that tracks keystrokes when usernames and passwords are entered on your computer.
  2. Ransomware. Ransomware is a type of malware that, when installed, can make all your files and your entire network inaccessible. The screen will show that your entire computer has been taken over and you will only get access back when you pay a ransom, usually in the form of bitcoins.
  3. Wi-Fi hacking. If you are browsing the Internet or logging into your personal online accounts on an unsecured Wi-Fi- network, like a public Wi-Fi at a café or library, fraudsters can hack into the Wi-Fi and gain access to your account information.

Friendly fraud

You would never want to believe that your friend, family member, co-worker or caretaker would steal your financial account information, but it does happen:

  1. You give your roommate your debit card and PIN to purchase groceries, they then sell it to a fraudster for profit.
  2. An elderly person is tricked into giving their caregiver their debit card information. The caregiver then uses it themselves or sells it for profit.

Identity theft

Identity theft can be a scary situation. This happens when a fraudster obtains all of your personal information and then uses it to open deposit or loan accounts in your name. It’s probably safe to say they will not pay back what they owe on credit cards or other loan accounts, and in turn they wreak havoc on your credit history and report.

So you know the types of fraud out there, but how do you protect yourself from falling victim?

  • If you receive a call or email that requests your personal information of any kind, hang up. Companies or financial institutions will never contact you for information. If you receive an email with a link or attachment asking you to “verify your account” information, do not click anything in the email and delete it. If you’d like to validate that the call or email is legitimate, call the direct number of the company that contacted you.
  • Do not click on links within pop-ups.
  • Log into your online banking account frequently to monitor your balances and transactions.
  • Get your credit report from one of the credit bureaus every four months from annualcreditreport.com to make sure all information is accurate.
  • Sign up for account notifications within your online banking or with Visa Purchase Alerts.
  • Make sure your contact information is up-to-date with your financial institutions and other companies you do business with. This ensures you will be properly notified if there is a possibility of fraud on your account.
  • Don’t use the same username and passwords for multiple websites. Change your login IDs monthly or quarterly.
  • Keep anti-virus, anti-malware and firewall protection consistently up-to-date.
  • Visit ATMs in well-lit areas. Do not proceed with an ATM transaction if the card reader appears to be tampered with. Check for loose or broken parts and look for pieces that stick out.
  • Stay extra aware of your surroundings at ATMs. Keep an eye out for anyone lurking around the ATM or looking over your shoulder.
  • Shop with your credit card whenever you can. Fraudsters can still get ahold of your credit card information, but a credit card is not connected to your real hard-earned money. Just make sure you stay on top of purchases to avoid racking up debt. It’s best to make a payment to your credit card right after your purchase.
  • Sign up for Online Statements to not only “go green” but to protect yourself from fraudsters who go through mail or trash to find monthly statements and other important and personal financial information.
  • Shred all important financial documents before throwing them away.
  • Never believe that you won a lottery prize that you did not apply for.
  • If a check sender claims that you need to send them money back after the check is deposited, it’s a sure sign it’s a scam.
  • Only log into your online banking and other personal online accounts on a password protected Wi-Fi.
  • Never give your credit or debit card information, or any other personal information, to your friends, family members, boyfriend, girlfriend, children, etc.
  • When shopping online, look for “https” in the web browser. “S” stands for secure. If it only says “http”, do not enter your information.
  • Only download banking apps directly from your App Store. Avoid downloading apps from social media sites or other websites. If you see an app on a website you’d like to download, go directly to the App Store and search for it.
  • Use Apply Pay, Samsung Pay or Android Pay. These use “tokens” instead of your real debit or credit card information making it nearly impossible for fraudsters to get ahold of your information.


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