Odds are you’ve watched a heist film or two. Ocean’s Eleven probably comes to mind. Although glamorous conmen and thieves capture our imagination on screen, real life scams and frauds are two very serious crimes. Our community, in particular, is often preyed upon with immigration, remittance and housing scams, leaving thousands of people across the country financially impaired. We understand how important it is to be informed and prepared for the worst, which is why we've put together this guide on fraud and scams
What is considered a fraud?
Fraud is a crime that involves deceiving a person or institution to obtain material or economic benefit in an unjust way. Fraud can be achieved by lying or simply by hiding information maliciously.
What types of fraud exist?
There are several types of fraud. Some of the most common are:
Embezzlement. This is the misappropriation or disloyal management of money, properties or supplies. Usually, people who commit embezzlement alter documents to hide their theft.
Expense reimbursement fraud. When an employee makes a claim for reimbursement of fictitious or inflated business expenses.
False claim fraud. Presenting a false claim in search of financial compensation.
Tax fraud. Providing false information or hiding information altogether on a tax return with the goal of reducing tax obligation.
Insurance fraud. Intentionally harming an insured property or asset to receive a compensatory payment from an insurance company.
Marriage fraud. Contracting marriage with the sole purpose of getting around immigration laws. The deception in this case comes from getting married not for love but only to obtain residency.
Fraud. Unlike the aforementioned, there are many types of fraud that don’t have a specific name attached to them. There are an infinite number of examples but the basis is always the same: a person deceives another person or institution in order to obtain a benefit in an unjust manner. For example, when a person purposely falls down the stairs of someone’s home with the sole objective of receiving financial compensation from the homeowner.
What is a scam?
A scam is a crime that involves reaping a benefit (usually financially) from another person through an elaborate scheme. The scammer creates an illegitimate business, which looks legitimate on the surface, to gain his victim’s trust and then convinces him or her of paying money or valued assets.
A scam usually includes the following characteristics:
Seems legit. In many cases, scammers impersonate workers from the IRS, the U.S. Government Information and Services (USCIS), a charity institution or a renowned health provider.
Issues or rewards. Scammers will usually state that you owe money to a government institution or that one of your family members is in trouble. Others will tell you that you’ve won a contest or sell you an opportunity to invest in a once-in-a-lifetime deal.
- A sense of urgency. Most scams emphasize haste so that potential victims will act as soon as possible and without thinking things through. In the aforementioned fake contest scam, they could mention that it’s a unique opportunity that is about to come to an end. In scams that revolve around an authority figure such as a government agency, urgency comes from an arrest threat, a lawsuit or even deportation.
- Specific forms of payment. Scammers tend to ask their victims to send payments through gift cards or money transfer companies.
What types of scams exist?
There are many types of scam out there. The most common ones are:
Phone scam. The scammer impersonates a prestigious organization to ask for money or personal information from his victim, usually through a phone call, text message or pre-recorded call.
The scammer usually offers false opportunities to buy items, make money or receive free samples.
Advance-fee scam. This is when someone asks for an advance fee on the sale of an article, service or loan. The victim pays the requested amount but never receives what he purchased.
Affinity scam. This occurs when the scammer impersonates a member of identifiable groups such as the elderly, religious communities or ethnic communities. The goal is to incite members into making “legitimate investments”. In essence, they take advantage of the group’s trust and secrecy to enable deception.
Internet scam. These are websites, online messages and emails that promise large financial rewards in exchange for an initial investment.
Pyramid scam. Also known as Ponzi schemes, they require a constant flow of new victims to function properly. A pyramid scam works as follows: new members are required to make an initial investment, after which they’re encouraged to invite other people to invest until, eventually, they will not only recover their initial investment but reap earnings. The problem is that, once new memberships cease, the whole scheme collapses and no one gets their money back.
Charity scam. These usually involve fake organizations that ask for donations to help out a noble cause. The money from those who donate in good faith is not used for any charitable action and goes straight to the scammer’s pockets.
Lottery scam. In this case, scammers obtain personal information or money from their potential victims through false lotteries or contests. They usually inform them that they’ve won the jackpot but that a deposit is required to cash the prize. They can also ask for personal information to take part in the fictitious contest.
Bank scam. This is when scammers attempt to obtain your private, sensitive information, such as usernames, passwords, PIN, credit card details, and sometimes money, by pretending to work at your bank or other financial institution you trust.
Immigration scam: Many immigrants are anxious about the immigration process, unsure if they qualify for green cards or unfamiliar with how the U.S. government conducts business. This makes them the perfect target for scams. There are scammers who target immigrants at all steps of the immigration process. The most common scam involves individuals who offer to help immigrants file paperwork in return for a large fee—but then either never file the paperwork, or apply for immigration benefits that their “clients” are not eligible for, often creating more immigration problems for their victims.
IRS scam. This is when a scammer pretends to work for the Internal Revenue Service (IRS) and contacts his potential victims with one of the following excuses:
Tax collection: The scammer states the amount that is owed in taxes and mentions a bank account where the money should be transfered.
Information verification: The scammer invites his victim to fill out a fake form to obtain his personal information.
IRS scammers usually communicate via phone call, email or postal service.
ICE or USCIS scam. These types of scammers impersonate agents from the Immigration and Customs Enforcement (ICE) or the U.S. Government Information and Services (USCIS) to request money or personal information from potential victims. In these cases, scammers contact immigrants through phone calls or emails to inform them of one of the following situations:
They have broken immigration laws
Their personal information contains errors or is outdated
They owe money
They must pay an immigration bond
If the person refuses to pay or provide the information requested he might receive lawsuit or deportation threats.
What are the main differences between fraud and scams?
The terms “fraud” and “scam” get thrown around indistinctly since they both involve deception and someone unjustly profiting from somebody else. Nevertheless, there is a substantial difference. As we mentioned before, a fraud involves a person who deceives
a legitimate and real third party (such as an insurance company) into paying an amount of money that doesn’t correspond to their case. A scam, on the other hand, is the result of a person making up a non-existing business (which looks legitimate) to convince potential victims to take part.
What to do if you are a victim of a fraud?
It’s very important to understand that a person attempting fraud is someone who wishes to be paid an amount of money he doesn’t deserve and that, to achieve this, he will inflict some kind of intentional harm to obtain a financial gain. So if someone asks you to financially compensate them for some harm inflicted (intentional or accidental) it’s essential that you have insurance that will vouch for you. The more assets you have insured, the more protection you will have against possible fraud. Homes, vehicles and businesses are all assets you can insure.
How should you handle fraud attempts if you’re not insured? The best thing to do before making rash decisions is to get legal counseling. A lawyer will listen to your case and advice on the best ways to act or he/she may even be able to help you get out of the situation entirely.
You can find professional legal assistance at a low cost of even free of charge:
What to do if you are a victim of a scam?
As mentioned before, a scam is a fake business that will try to get you to invest money without getting any benefit in return. If you’ve been the victim of a scam and were deceived into giving money, there are a couple of things you can do.
First off, get in touch with the company through which you made the payment to explain the scam and ask for your money back. For example:
If you made the payment through debit or credit card, call your financial institution
If the payment was a bank transfer call your bank
If the money was made through a money transfer company such as Western Union, contact said company
In any case, store all records related to the scam (letters, notes, emails) since they will be useful when it comes to supporting your claim for reimbursement.
Secondly, you can report the scam to the Federal Trade Commission (FTC).Thanks to the information you provide, the FTC will have more tools at its disposal to build a case against scammers, detect new scams, educate the public and share information about what’s happening in each community.
Tips to avoid frauds and scams
To avoid fraud:
Insure your assets: Buying an insurance policy that protects your assets is a great form of protection against frauds. If you’re the victim of fraud, the insurance company will conduct an investigation and will handle things accordingly. For example, if a person claims you crashed their car and demands that you pay for repairs, you should get in contact with your insurance company right away. They will conduct an in-depth investigation to determine who’s responsible for the damage and, in case financial reimbursement is in order, it will be the insurance company that takes responsibility, not you.
Keep a clear record of your business. The best way to stave off scammers is to keep a clear record of your every move, especially if you own a business. Companies that work in warehousing services, for example, use state-of-the-art management systems that ensure there is a clear record of every single package being processed. This avoids not only errors and mishandlings but allows them to have a full-proof system in place against potential scammers.
Consult a specialist before making any decision. You may own assets that are not insured. In those cases, when being approached by someone who claims you’re responsible for something you didn’t do, you should consult a lawyer immediately. There may be other courses of action you can take.
To prevent scams:
When in doubt, never provide your personal or financial information. Keep in mind that legitimate organizations will never ask you for personal information via telephone calls, email or text message.
Block all calls and text messages from unwanted phone numbers. This way it’s easier to avoid contact from a scammer.
Don’t trust names or phone numbers on caller ID. Scammers have the necessary technology to alter information and deceive you
Recognize the payment methods that scammers use. Many scammers choose gift cards or money transfer companies to request payments from their victims. Be extra careful of people or companies that request payments through these channels.
Be suspicious of those who ask you to ask swiftly. Legitimate organizations will give you time to act. Anyone who presses you for money or personal information is probably a scammer.
Before you do anything, confide in somebody close to you. Talk to a family member or friend about the situation. Listen to other points of view that might help you understand if you’re dealing with a scam or not.
Don’t trust businesses that promise quick and easy profit. Behind any investment that guarantees a quick return usually lies a pyramid scheme or a fake business.
Keep a low profile around your finances. Although anybody can be a victim of a scam, the most attractive targets are wealthy people. Be prudent with your finances. Avoid contact with strangers and don’t publish anything on social media that may hint to how much you earn or how much you have in savings.
Share this information and beat the scammers!
We hope we have provided you with enough information to not only identify but prevent fraud and scams. If you know anybody who might be a victim of a scam or fraud, feel free to share this guide. The best path towards prevention is to be informed with trusted information. If you have any questions about this or other subjects don’t hesitate to contact us through our chat. We’re always here to assist you.