What Is Fraud?

What’s the first thing you think of when someone says the word fraud? Is it Bernie Madoff and his Ponzi scheme? Elizabeth Holmes and Theranos? Your ex? Whatever it is, people and companies who make money by lying are enough to make you lose faith in humanity.

But don’t lose hope. The more you know about fraud, the easier it is to protect yourself.

Impact of Fraud

The financial and emotional consequences of fraud in the U.S. are staggering.

Think about how much work—and money—goes into investigating, tracking, convicting and imprisoning just one fraudster. And don’t forget to factor in all the money spent on educating consumers about how to protect themselves. Then there are the costs of programs to help fraud victims recover. Add it all up, and it’s a huge amount of money.

According to the Federal Trade Commission, 2024’s fraud losses will top 2023’s $10.3 billion, with imposter scams taking the top slot for most reported fraud type.^[2]

Now for the emotional toll. It’s mostly regular people who are on the receiving end of fraudulent activity (aka scams). No one ever feels good about being taken advantage of, but fraud victims often feel ashamed and alone—afraid to tell anyone what’s happened to them. Most fraud schemes aren’t even reported to authorities.

Examples of Fraud

Now that we’ve talked about what fraud is and how much damage it does, let’s look at some examples of how it works.

Elder Fraud

Elder fraud targets older folks by taking advantage of their weaknesses (like unfamiliarity with tech and modern trends) to deceptively take money from them.

Identity Theft

Using sensitive information (like your SSN or driver’s license) from a real person, a criminal commits identity theft by pretending to be that person to either steal money or property. Identity theft is the basis for many other kinds of fraud (like tax fraud below).

Debit Card Fraud

In debit card fraud, someone illegally accesses your debit card information (shocker) and uses it to purchase things. This can also apply to credit cards (gross).

Tax Fraud

The most common type of tax fraud that regular people suffer from occurs when a criminal steals someone’s Social Security number and files a tax return to pocket the victim’s tax refund.

Employment Fraud

Folks looking for a job are at risk from employment fraud. Fraudsters commonly post fake job listings or make fake job offers to lure you into giving over sensitive data like your SSN or bank account info.

Wire Fraud

Wire fraud often involves messages from a Nigerian Prince or someone with an equally questionable identity. But no matter who they claim to be, they’re actually a criminal trying to convince you to wire them money for what sounds like a legitimate reason (charity, legal issues, etc.) all while planning to take it and run.

Mail Fraud

Mail fraud is pretty easy to define. It’s any kind of fraud that uses the mail. This ranges from an “official letter” claiming you won a bogus sweepstakes (all you have to do is enter your sensitive info to collect!) to a scammer pretending to be someone from the government using the mail to send you a document with a forged letterhead.

Mortgage Fraud

The most common type of mortgage fraud is called fraud for profit. Fraud for profit is typically committed by people working in the mortgage industry who make promises they don’t keep—sometimes ending in their selling your property out from under you.

If you want to read about more fraud examples, check out these common types of fraud.

How to Protect Yourself

We’ve answered the question “What is fraud?” But knowing what it is only does you so much good. You have to change your behavior to protect yourself.

It may sound paranoid, but to really protect yourself from fraud, you pretty much have to assume there’s a fraud risk lurking around every corner. But that doesn’t mean you have to buy a cabin in the Yukon, set up solar panels, and never speak to a human again. Just add a few extra precautions into your everyday habits:

1. Get security software. Guard your online information with up-to-date security software, and never use your personal information on a public computer. 
2. Get ID theft protection. Make it a habit to protect your identity—it’s one of the best ways you can keep your online profile safe. And if you don’t know which one to get, we’ve got a recommendation at the end of this article. 
3. Monitor your financial accounts. Keep an eye on your balances, and watch out for unfamiliar transactions. 
4. Read financial emails. Check any emails—as long as they’re from a trusted source—that mention a change of financial information. 
5. Shred sensitive documents. Chop up those banking records, ATM receipts and deposit slips (but only when you no longer need them). 
6. Check your credit reports regularly to monitor for suspicious activity. Did you know you can often tell from your credit report if you’ve been the victim of identity fraud? Learn how to read your credit reports so you can identify red flags. 
7. Share your info carefully. Think twice before sharing your information, even with a trusted and verified source.
8. Beware of spam. Filter spam phone calls by only answering calls from contacts or phone numbers you know. Same goes for emails.

All these steps might sound like a lot of work at first, but it’s worth it to avoid the troubles that come with fraud.

Don’t Wait Until It’s Too Late

Staying safe online is basically a full-time job. The best way to stay on top of all the fraud schemes out there is to work with an expert who knows how to protect your data from fraudsters.

We recommend RamseyTrusted partner Zander Insurance for fraud protection and keeping your identity safe. They’ll do all the hard work for you and keep an eye on your information so you don’t have to worry. They’ll even send you fraud alerts and monitor the dark web for your info.

While Zander can’t prevent you from handing your money over to fraudsters (only you can educate yourself to avoid this), if criminals do figure out a way to take money from your account without your permission, Zander will replace it—up to a million dollars! All of this comes with their basic Essential Plan.

Or if you’re all in on protecting yourself, you can get the Elite Bundle, which includes protections like home title monitoring, UltraVPN (virtual private network) and UltraAV (premium antivirus).

Get comprehensive protection today!