Common Fraud Schemes

Mail Fraud

This includes phony contests or sweepstakes; selling nonexistent or misrepresented investments in annuities, stocks, securities, precious metals, or real estate; touting worthless or dangerous medical cures; soliciting money for phony charities; promoting participation in fraudulent work-at-home schemes; and selling "dream vacation" packages that turn into nightmares. This list is not all-inclusive, but it represents the variety of mail frauds that can victimize elders and younger people as well. In some instances of mail fraud the victim is asked to place a phone call to confirm their winnings. The victim may then be asked for financial information, for example, account or credit card numbers, to "check that we are talking to the right prizewinner." Charges can then be made to the victim's account without their knowledge.

Telemarketing Fraud

Telefraud operations employ callers who use rehearsed, high-pressure sales pitches over the telephone. They convince people to buy products that are never delivered, invest in fictitious enterprises, participate in contests to win worthless prizes, or contribute to phony charities. Telefraud operators can also use many of the same scams as the mail fraud operators, e.g., phony sweep stakes.

Internet Fraud

With the growth of the Internet, scams that had previously been limited to telephone or mail are now being perpetrated via the computer. There are now variants of the fake contest, debt consolidation, business opportunity, miracle cures, and charity scams that are committed with false or misleading websites, or through e-mail solicitations. In addition to the Internet variations of telephone and mail scams, there are new scams that have recently appeared that are unique to the world of computers. While it is impossible to document all of these scams, these are some of the most common:

Non-delivery of Merchandise or Payment

This was the most widely reported type of fraud in 2010. This is when a purchaser does not receive the items purchased over the Internet or telephone, or when a seller does not receive payment for items sold. Sometimes, this crime occurs in the context of an online auction site.

Phishing

This type of fraud is the sending of a false e-mail that claims to be from a legitimate business or government agency. Often times the e-mail claims to be from a financial institution, the Social Security Administration, or the FBI. Often the e-mail claims that billing or account information needs to be updated, or that the victim's help is needed to catch a dishonest employee. Sometimes there is a claim that the individual's account will be frozen or liquidated, if information is not provided. This fraud attempts to get the recipient to reveal personal information, passwords, credit card numbers, or account information. Once this information is obtained, identity theft occurs and the thief uses the information to perpetrate other crimes without the knowledge of the victim.

The Stranded Victim

This occurs when the criminal hacks into an individual's e-mail address book. The criminal then sends an e-mail to contacts in the address book claiming to be stranded in a foreign country and in desperate need of help. The e-mail appears to be from a friend because it comes from his or her e-mail account. The criminal asks for money to be wired to help them out of their bad situation, but it is actually a fictitious story.

Overpayment Fraud

This can occur over the Internet or by mail or phone when the victim receives a payment which is significantly larger than the original sum agreed upon for a product or service. Often this is used when the victim is advertising an apartment rental or the purchase of a vehicle. The victim is then asked to deposit the payment into his or her account and pay back the difference. In actuality, the original payment is counterfeit and the individual is being scammed.

Internet Dating Scams

This begins with a man or a woman registering on a dating website. Often the website itself may be legitimate, but in due time a scammer, using an assumed name contacts the victim. The scammer generally claims to live outside the United States. While the correspondence begins on the dating website, it often moves into personal e-mail or even phone calls with the victim. As the trust of the victim is gained, the scammer professes romance and often marriage intentions toward the victim. Ultimately, however, the scammer will begin to ask for money from the victim for various fictitious scenarios. Some of these scenarios include: travel expenses, visas, help getting out of a difficult situation, medical emergencies, or help for a needy relative.

Advance Fee Schemes

These occur when the victim pays money to someone in anticipation of receiving something of greater value — such as a loan, contract, investment, lottery winnings, "found money" or gift — and then receives little or nothing in return. In some cases, thieves will offer to find financing arrangements for their clients who pay an advanced "finder's fee." They require their clients to sign contracts in which they agree to pay the fee when they are introduced to the financing source. Victims often learn that they are ineligible for financing only after they have paid the "finder" according to the contract.

Electronic Banking Fraud- Automated Clearing House (ACH) Debits, Remote Created Checks, Online Banking, etc.

An exploiter may be savvy enough to realize that current financial products and services offer non-face to face transactions via electronic banking. The person victimizing a vulnerable adult may realize that they will never need to show up in your branch in person (and be caught on camera). Financial products such as ACH debits, remotely created checks, bill payer services, telephone banking, remote deposit, and online banking can offer an exploiter an anonymous means to withdraw funds from the account of a vulnerable or elder adult. The exploiter may also utilize your institution's electronic services to monitor account activity and target only those accounts that the victim rarely uses (e.g., special savings, Christmas club account, or a line of credit). For the victim, this activity may go unnoticed for weeks or months. These electronic banking services may be exploited by either scam artists or exploiters with a personal relationship to the victim, e.g., family, friends, fiduciaries, etc. Anti-money laundering software may also pick up cases of financial exploitation.