Fraud is wrongful or criminal deception, carried out with the intent to reap financial or personal gain. Fraud can take a wide variety of forms, from fake investment opportunities, to the emails that are sent out in their millions promising a huge financial payout if the recipient pays a small fee.
Fraudsters are increasingly well-organised, targeting their victims via ever more-sophisticated and highly structured scams. Fraudsters network online to share information, modify their schemes in response to police interventions, and exploit new technology in order to steal personal information and reap financial gains.
Fraud cases can often be highly complex especially when large sums of money are involved and is treated as a crime. In many situations a fraud solicitor may be required to help defend against a case or to help win a complex case.
Types of Fraud
There are many different kinds of fraud, most of which fall into one or more of the following categories. Most often, fraud is carried out for financial gain.
Individual versus corporate fraud
Any fraud that specifically targets a person directly is termed an individual fraud. This is in contrast to frauds that affect organisations, which is termed corporate fraud.
Ponzi schemes, or “get rich quick” scams are a well-known kind of individual fraud. In these scams the fraudster offers a bogus investment opportunity, promising high returns in a very short amount of time. Instead of being invested the money is stolen, and apart from the initial investors—who are paid using funds taken from later investors in order to generate credibility for the scheme—nobody receives any money.
Pyramid schemes, property investment scams, doorstep crime, pension liberation scams, and holiday club fraud are all examples of individual fraud. In these scams, the victim is typically approached by someone offering an investment opportunity that sounds too good to be true.
Professional corruption and misuse of businesses
Corrupt professionals—for instance in the real estate or insurance industry—is a major kind of corporate fraud. Legitimate businesses are also often misused, for instance by using business addresses to receive fraudulently-obtained goods, or to launder money obtained through fraudulent means.
Identity theft and identify fraud
Identity theft occurs when someone steals another person’s personal identification details. With identity theft the goal of the fraudster is to steal enough information—such as name, date of birth, and current address—to steal and use the victim’s identity to commit fraud. In identity fraud, the stolen details are used to commit for that purpose.
For instance, a fraudster can use a stolen identity to open a bank account, obtain a credit card or loan, make purchases, and obtain a fraudulent driving license or passport. When someone is the victim of identity fraud the crime can have a direct effect on their finances and can also impact their ability to obtain loans and credit cards. In extreme situations they may even be blamed for crimes they haven’t committed.
This is a kind of fraud in which the fraudster promises their victim goods, services, or financial gain in return for payment of an advance fee. The victim pays the fee but doesn’t receive what they paid for, and typically never hears from the seller again. Lottery scams, fraudulent prize draws, check overpayment scams, and a wide range of business opportunity and work from home opportunity scams are examples of advance-fee fraud.
Cyber crime and online fraud
Cyber crime includes any criminal act that deals with computers and computer networks. For instance, hacking is a form of cyber crime. In addition, cyber crime also includes online fraud, meaning fraud that is conducted over the internet.
A common example of this is account takeover, where a fraudster poses as a customer and gains control of an account they own. Once they have control of the account, the fraudster uses it to make unauthorised purchases or other transactions. Other examples of online fraud include click fraud, internet auction fraud, and romance scams, AKA catfishing. In the latter case, scammers target people in order to develop a fraudulent romantic relationship, either to gain enough personal information to steal the victim’s identity, or to scam them out of money directly.
The UK’s national fraud-reporting centre is ActionFraud. Targets and victims of any kind of fraud can report it online. In addition to a fraud-reporting centre, ActionFraud also provides a victim support service to help victims of fraud cope with the consequences.
It’s typically very difficult for fraud victims to recover any of the money they have lost as a result of the fraud. Often it’s only cases where a credit card is used to commit fraud that the victim has a hope of resolving the matter, as credit card transactions are protected in cases where it can be proven that the fraud wasn’t the victim’s fault.