Common Types of Financial Fraud

There are many different types of financial fraud. These can impact people and businesses across the planet, in varying ways. Because fraud can cause significant financial losses and other types of harm, it is harshly prosecuted by the state and federal government. Here, we’ll take a look at the impact of financial fraud, its types, and how it is defined.

The Impact of Financial Fraud

The victims of financial fraud are known to suffer financial and emotional harm; they can even experience medical problems, such as anxiety, panic attacks, high blood pressure, and depression because of their victimization. These victims do not suffer alone. Each year, millions of people throughout the United States are victims of fraud, according to the United States Attorney’s Office.

Victims of fraudulent crimes are left feeling personally violated. It’s much different than having one’s $50,000 car stolen and replaced by their auto insurance carrier. It’s not the same as having one’s home broken into and having their laptops and jewelry stolen. It’s much more personal than that, especially when the fraud involves identity theft, ruining a victim’s credit, stealing a victim’s tax refund, or robbing a victim of their entire life savings through sophisticated investment scams.

The U.S. Attorney’s Office had this message for fraud victims: “Fraud crime is a personal violation. Your trust in your own judgment, and your trust in others, is often shattered.”

Victims of fraud typically experience the following:

  • They question their own judgment.
  • They have trouble trusting people, even those close to them.
  • They feel vulnerable and taken advantage of.
  • They lose faith in identity protection.
  • They are embarrassed to tell others about their victimization.
  • They are afraid of credit cards, online banking, and paying bills online.

Why is financial fraud so bad? Fraud crimes can destroy people’s financial security. If the victim is disabled or elderly, or if they are unemployed and living on a fixed income, they may not have the means or capability of recovering their losses.

Some victims are stripped of their financial security, and their quality of life is ruined. If they are past retirement age, they may have to depend on others or the state for support, and this can be traumatic in itself, especially when their life savings are wiped out by a fraudulent scheme.

Defining Fraudulent Crimes

What is fraud exactly? Fraud is where an individual or business deceives a victim by promising products or services or another financial benefit that is never provided or does not exist. “Typically, victims give money but never receive what they paid for,” according to the U.S. Attorney’s Office.

Who are the fraud victims? Anyone can be a victim of fraud. Con artists can go after anyone; they can target men, women, children, the elderly, the disabled, the educated, and the uneducated—and even people who have passed away! In fact, those who commit fraud will often target specific groups based on their credit score, their age, their geographic location, their income, or if they’re collecting Social Security retirement benefits.

The people who commit fraudulent crimes are as diverse as their victims. The perpetrators can work for mortgage companies and investment firms. They can be college-educated, white collar criminals and they can be high school dropouts. However, many con artists are career criminals with a long track record of criminal behavior. Often, they’re seduced by the idea of making a “quick buck” through fraudulent schemes, especially when the return is so much higher than a 9 to 5 job.

Types of Financial Fraud

There are different types of financial fraud, and these are defined and penalized in various ways. Gaining insight on these can help if you’ve been the victim of fraud or have been accused of such a crime.

Common types of fraud include, but are not limited to:

  • Embezzlement
    This type of financial fraud occurs when a person in a position of authority or trust takes or misappropriates money. It can also be committed by an employee of a company.
  • Identity Theft
    This involves obtaining and using another’s private identifying information by way of theft, fraud, or deception. This may include a Social Security number, bank information, etc.
  • Accounting Fraud
    Accounting fraud involves the intentional manipulation of accounting records, typically for financial gain. This can mislead shareholders, investors, and others.
  • Bankruptcy Fraud
    This type of fraud involves intentionally omitting or misrepresenting debt, assets, or property, including false information, filing multiple times, or otherwise trying to misuse the bankruptcy process.
  • Insurance Fraud
    Knowingly committing an act of fraud in relation to an insurance claim or any insurance proceedings may constitute insurance fraud. Filing a false claim or exaggerating losses are examples of this crime.
  • Healthcare Fraud
    Fraud in healthcare may occur in many ways, such as through overbilling, charging for medical procedures that were never performed, or recommending unnecessary treatment. Healthcare fraud may be committed by any professional in the medical field.
  • Telemarketing Fraud
    Considered one of the most persuasive types of fraud by the Federal Trade Commission (FTC), telemarketing fraud involves deception committed over a telephone call. This may include misrepresentation and false statements to get the victim’s money or personal information.
  • Mortgage Fraud
    Intentionally leaving out, misstating, or misrepresenting information related to a mortgage loan is considered mortgage fraud. This type of fraud may occur in the funding, purchasing, securing, or insuring of a mortgage loan.
  • Immigration Fraud
    This type of fraud occurs when a person intentionally provides false information on an immigration application, marries solely for citizenship, or commits any type of deceit or misrepresentation related to the immigration process.
  • Fraud Involving Investments, Securities & Commodities
    Securities fraud is a type of financial fraud that takes place when a broker, investor, or other person involved in securities, investments, and commodities misrepresents information, omits information, or uses deceit to influence investors or the market itself.

Fraud crimes are criminalized under state and federal law, so they can be prosecuted in state or federal court depending on the facts of the case, such as the state or federal laws violated, the amount of money stolen, and the type of financial fraud. The location of the crime and the use of the U.S. Postal Service, Medicare, or the Internet can also affect whether a case is prosecuted on the state or federal level.

If you’re facing state or federal fraud charges in Tampa or Hillsborough County, contact Thomas & Paulk, P.A. for a free consultation.