There are as many different types of financial fraud as there are criminals to commit this crime. Every time it seems as if the police or lawmakers have eliminated one type of scheme another one pops up. This is because there is a lot of money to be made in financial fraud and to swipe your funds the thieves don’t even have to leave the comfort of their own couch. It is best to be on your guard if you don’t want to become a victim. Here are four different types of financial fraud to watch out for.
Identity Theft
This happens when a thief takes over your identity by stealing your personal details such as your bank account number, social security number, name, address, and date of birth. This information can then be used to take out bank loans and credit cards that are never paid back, thus ruining your credit rating and making you liable for debts. They could empty your banking and savings accounts and commit other crimes in your name.
Identity theft does not have to involve a lot of high-tech equipment. Criminals might use guesswork or go through your dustbin to get the information they need or search on social networking sites. You may be thinking to yourself ‘how do I see if someone is using my social security number, or date of birth?’ If so, check this article from Tally to find out more. The chances are you won’t know about it until they have committed the fraud in your name, and you are being chased for repayments. However, you can simplify your credit commitments using a company such as Tally which pays off your debts and leave you with one monthly payment. This makes it easier to identify fraud as you don’t have lots of different lines of credit in your name making any inconsistencies easier to spot.
Ponzi Schemes
A Ponzi scheme works by convincing you to put money into an investment that promises high returns for a low term of investment. The scheme will pay you out brilliant rates at the end of the term and it is up to you whether to keep your money invested, and potentially invest even more, which will be tempting because the rates are so high, or you can take your money and walk away. Most people opt to reinvest. However, the fraudster isn’t investing the money in funds or stocks; they are keeping it for themselves. If you had chosen to take your money out of the scheme, then you would have been paid using money from another investor rather than money that had been made legitimately on the stock market.
Ponzi schemes can be run for a long time as long as nobody gets suspicious. The key to identifying one is asking what the underlying investment is. If you are not given a direct response that involves funds, bonds, and investments, walk away. Many fraudsters will try to fob you off with science but essentially, they can’t answer the question because there is no underlying investment.
Pyramid Schemes
Pyramid schemes are similar to Ponzi schemes in that there is not usually an underlying investment. They work by convincing you to put money into a scheme that will make money. You have to pay some money upfront and convince other people to join the scheme too. You are promised a cut of their membership fee. This type of scheme doesn’t last long as investors soon run out of recruits. Usually, they don’t get paid anything back themselves as they will always find themselves at the bottom of the pyramid and not due for a pay out when the scheme breaks down. The person at the top of the scheme walks away with everyone’s money which could amount to several thousand dollars.
If you are offered a scheme like this, make sure you ask lots of questions. If it sounds too good to be true or you have any suspicions, then decline the offer.
Romantic Schemes
Many people meet long-term partners online these days and have no problems. Other people become the victim of romantic scams. It may start with a few messages and before you know it you will find yourself getting love-bombed by your suitor. You may start to feel the same way about them.
Unfortunately, they tend to live in a different country or work in a job, such as the military which takes them away a lot and requires them to be secretive about their whereabouts. They may even send you a picture of themselves in military uniform to ‘prove’ their identity. None of this will turn out to be true but stories like these make it easier for them to make excuses not to meet you in person.
Scammers often go on with this for a while and then ask to borrow a small amount of money which may be little enough for you to lend them. This is a test to see if they can get money out of you. Next time they ask for money it will be a much larger amount but even this can sound plausible as they might pretend to have a sick relative, they need to pay medical bills for or need the money to visit your country.
By the time the scam has finished, you may have wasted several thousand dollars and have no idea of the true identity of your scammer. This means that they can’t be traced, and you will never see your money again.
If you are looking for love, it is best to meet someone who lives close enough for you to date in person and meet up regularly. If they are genuine, they will want this too. Don’t give them any money until you are sure your relationship is on solid ground.
These are just some of the most common types of financial fraud to watch out for. Keep your wits about you and make sure nobody has access to your personal details if you want to stay safe. Remember, if something sounds too good to be true, it probably is.
