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Financial fraud occurs when an individual steals money from you or harms your finances through lies, misleading information, or other illegal practices. There are several ways that fraudsters can use to commit financial fraud, including using stolen property, documents, or financial data.
Different online methods such as malware and phishing can give them access to your personal information can lead to financial fraud. But first, let's look at the common types of financial fraud:
Embezzlement involves a person entrusted with money or property stolen for personal use and misappropriating the resources to get again. Most of the time, the trustee only has legal access but is not the owner. This financial crime can be categorized as financial crime.
To protect yourself from this type of fraud, always vet your employees. Do a full background check, implement zero-tolerance policies for theft and restrict safes and cash boxes.
These are fraudulent plots that involve a promise of high profits to investors. However, this promise is pegged on your ability to enroll more people in the scheme. The more you recruit, the more you earn, and the more your recruiters recruit others, the more the returns earned dollars. Sometimes, the fraudsters may use a product as a front to entice consumers and hide the nature of the pyramid scheme. At first, the scheme organizers may pay afew investors, but they disappear once they have recruited many investors.
To avoid being defrauded, do not participate in any promotion that looks like a pyramid scheme. Additionally , get information regarding the company, such as the shareholders, and read their prospectus. If they fail to provide the above information, do not invest your ha.
In the past years, credit card financial fraud has increased. In fact, criminals have become more aggressive, making Americans lose around $56 billion annually. In this fraud, individuals use your credit or debit card without your permission. They can get the card through actual theft or the card’s number through illegal internet connections.
If you lose your credit or debit card , always cancel the card immediately to prevent this fraud. Additionally, always use a strong password when shopping online under your secure Wi-Fi and avoid using shared Wi-Fi.
Our third major financial fraud is identity theft. Identity theft occurs when someone uses your identifying information without your authorization. This identifying information includes your names, social security number, and debit card details. People who steal such information use it to commit fraud, such as applying for credit, shopping online, filing taxes, or getting medical services.
To avoid identity theft, steer clear of giving out your personal information such as bank account number, social security number, or date of birth. Always use a strong password on your online accounts and collect your mail every day.
Tax fraud is a federal crime. It occurs when a person or entity forges tax information to reduce the tax obligation. It is orchestrated by claiming false deductions and not reporting the wholei n come.
To be safe, every individual should avoid tax fraud personally. Always file complete and accurate tax returns. Additionally, file your taxes early since most tax frauds occur during tax season.
Insurance fraud can occur in different ways. First, it can happen when a claimant obtains an insurance claim they are not entitled to or when the insurance company denies a claimant a benefit they deserve. The insurer can also sell policies from fake companies or not submit premiums from the insurer's side. On the other hand, the buyer can fake a kidnapping, death, or medical history.
This crime can be avoided by vetting insurance agents and refusing to sign any document without full disclosure of information. If you are comfortable with the information given, always confirm the coverage through the insurance carrier. To avoid inflated prices, always collect and compare quotes from different insurers.
It is vital to report financial fraud to the relevant law enforcement and agencies as soon as possible. In case of fraudulent charges, always cancel or dispute them as soon as you discover them. Furthermore, if you are a victim, always collect the documents showing the crime, such as credit reports, bank statements, and tax forms from the previous years, and keep filing them.
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