7 common scam and fraud types you should know

Guy Bauman

March 18, 2024

  • # Fraud Prevention
  • # Phishing Protection
  • # Account Protection

Your bank account. Your mail. Your texts. Scams and fraud can happen anywhere — and you just have to know what to look for to stop them.

While you might brush them off at first, unrecognized charges and suspicious messages are tell-tale signs that someone has maliciously used your data to commit a scam or fraud. At best, they’re a nuisance, and at worst, they can lead to identity theft and monetary loss. 

Avoid these consequences by learning to spot odd activities. Here’s everything you need to know about popular scam and fraud types to watch out for and how to protect yourself. 

What is fraud?

Fraud is an illicit activity in which a criminal intentionally uses your funds or identity for their own gain. This often comes in the form of impersonation, like trying to get a loan in your name and keep the money. 

Criminals try their best to commit fraud without detection. The longer you don’t notice what’s happening, the more they can take from you. You may only discover you’ve been the victim of fraud when you see suspicious activity on your accounts or notice signs of identity theft, like a drop in your credit score.  

What is a scam?

A scam is similar to a fraud in that a criminal gains access to your funds or identity. However, in a scam, the malicious actor manipulates you into providing information or money, rather than taking it discreetly. 

These crimes run on persuasive tactics to get you to give up personal details or login information. Criminals might pose as representatives of legitimate entities, like your bank, to trick you into thinking you’re doing the right thing — but their goal is to steal.

7 common types of scams and frauds

While frauds and scams work a bit differently, they both rely on your vulnerabilities to succeed. You can give yourself armor by learning about examples of frauds and scams to watch out for. Here are seven popular types:

1. Mail fraud

Mail fraud is an umbrella term that describes any type of crime, including scams, that involves postal or courier systems. It can range from opening someone else’s mail to perpetuating a nefarious scheme through letters. For example, a criminal might send a seemingly legitimate message about phony sweepstakes or job offers to get you to respond with sensitive data, like banking information or your social security number. 

2. Card fraud

There are numerous types of card fraud, which refers to crimes committed with debit, gift, or credit cards. Skimming your card number at a payment terminal, stealing your physical card, or grabbing your digital card’s information all fall into this category. The criminal who captures your card data might misuse it to purchase items or move funds to their accounts. 

3. Account takeover fraud

Account takeover fraud is as dire as the name of the crime sounds — an unauthorized third party gains access and control of your bank account. These frauds can happen quickly because of how fast it is to transfer funds online. Fraudsters might swiftly transfer your money to their account, make purchases, or apply for cards in your name. 

4. Insurance fraud

Insurance fraud is a high-level term to describe any crime involving insurance benefits. These wrongdoings can range from falsifying claims to get a larger insurance payout to illegally using someone else’s benefits. 

Many times, these frauds happen when an insurer requests real benefits for something that didn’t happen. But you could become a victim of insurance fraud if a fraudster — like a driver you’ve gotten into a fender-bender with — invents a story to try to get a payout from your policy. In the case of a car-related incident, the driver might divert you to a specific body shop that charges high fees you have to pay to get your car back.

5. Phishing scams

Phishing is a manipulative messaging or calling scheme that aims to extract data from you. A bad actor might call, text, or write you an email impersonating a legitimate employee of an organization, like your bank or a service you subscribe to. 

The criminal will invent a matter that you must address — usually urgently — to avoid consequences. For example, they may insist you make a past-due mortgage payment or they’ll take your house away. The message is fake, and when you pay up or provide personal information, you’ll be handing that money or data to a criminal.

6. Gift card scams

Gift card scams range in nature, but they usually involve someone trying to get you to buy a gift card from or for them. For example, a criminal might send you a text pretending to be a family member in need, asking you to buy a gift card to help them out of a crisis. You might also purchase a gift card that a scammer has already spent or tampered with, meaning they get to keep money that’s technically yours.

7. Fake check scams

Check scams are financial crimes in which bad actors send you a check for a purchase, an “upfront payment” on a job or materials, or sweepstakes they claim you’ve won. When you deposit the check the criminal has sent you, your bank will recognize it as fake, removing the funds from your account. But before that happens, the person running the scam convinces you to send all or part of the check funds back to them — perhaps feigning that they accidentally “overpaid” you or need you to pay fees on the prize you’ve “won.” The scammer will keep that money, and you’ll be out of those funds you sent plus the ones you unwittingly deposited with the fake check.

How to prevent fraud and scams: 3 tips

Knowing what to expect from common frauds and scams is the best way to stay vigilant. You’ll be quicker to notice suspicious activity and stop it before it gets serious. 

Here are a few tips that can help you identify fraudulent or scammy activity even faster:

1. Monitor your accounts and credit report 

Fraud often happens quietly, and scams can be very convincing, so you could be a victim without noticing immediately. If you don’t often check your accounts or credit reports, you may not know someone’s stolen your money or identity until it’s too late.

Make it a habit to look for drops in your credit score, which could be a symptom of a criminal opening accounts in your name, or charges on statements you didn’t make. It’s also wise to look at your service bills, like your phone account, to make sure a scammer hasn’t charged you for fake services. 

2. Avoid interacting with messages from strangers

Data phishers work on all platforms — from dating apps to texting — so avoid interacting with contacts you don’t recognize. Even if the person behind the message seems like an actual employee at a company, someone you know, or a person you can trust, think twice. 

A legitimate enterprise wouldn’t text you to ask for personal information, just as it’s unlikely that a genuine new love interest would urge you to buy them a gift card. These are probably phishing attempts or romance scams. 

Be doubly suspicious if unexpected messages contain links, as they may take you to unsafe websites that grab data, or files to download, as they may install malware on your computer.  

3. Protect your personal information

The more you protect your personal information, the harder it will be for someone to defraud or scam you. Avoid giving out your contact information to unknown third parties or sharing card numbers with them. Use strong passwords that contain a combination of letters, numbers, and symbols for your accounts, and when possible, use biometric authentication services, like the one IronVest offers. This keeps criminals from accessing your accounts, even if they have part or all of your login information. 

Get airtight data protection with IronVest 

Even if you always check your accounts and stay wary of messages from strangers, you could fall victim to fraud or an internet scam. And the less data criminals can access, the better. 

Get IronVest and biometrically protect your accounts so nobody can open them except you. With this comprehensive super app, you’ll also gain access to masked email addresses, phone numbers, and credit cards — so you never have to give your actual digits to a third party. Scammers or fraudsters might believe they have your real credit card number or contact information, but they won’t. And they never will.

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