Other Types of Financial Fraud

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Although there are countless instances of financial fraud, the majority fall into a few major categories. 

  • Identity Theft: Identity theft is a crime that involves the illegal access and use of an individual's personal and/or financial information. Identity theft can result in financial loss and seriously damage a victim's credit history, requiring substantial effort to repair. Identity theft often sets in motion, or makes a victim more vulnerable, to other types of financial fraud. Identity theft may be committed against anyone whose personally identifiable information (name, Social Security number, credit card number, date of birth, etc.) is exposed. It's important to take steps to minimize your risk of identity theft
  • Mortgage and Lending Fraud: Traditional mortgage fraud includes situations in which homebuyers and/or lenders falsify information to obtain a home loan. False information can include overvalued appraisals, guarantees of low interest rates, inflated income, and the fraudulent use of someone's name without the knowledge of that individual. This fraudulent activity can also include loan modification, foreclosure prevention, and other lending fraud, for example, in which a consumer is promised a service related to a mortgage (whether new or refinanced) in exchange for an up-front fee. Unfortunately, many of these loan modification and foreclosure prevention fraudsters take the pre-paid money and disappear before providing any services to the victim. 

    These scams use a variety of simple tactics to identify their financially distressed victims. Some scammers locate distressed borrowers from published foreclosure notices or other publicly-available sources. Others rely on mass-marketing techniques such as flyers, radio, television and Internet advertising to lure in distressed borrowers. Still others deceptively suggest an affiliation with a government agency to quickly earn the trust of unwitting victims.
  • Mass Marketing and Other Fraud: Mass marketing fraud is the use of false promises of cash prizes, services, goods, or good works in exchange for fees, donations, or purchases. This crime may be committed through the mail, telephone, email, television ads or infomercials, or any other form of mass or individual communication. This fraud is often defined by the form of communication used to conduct it. Mail and wire fraud occur when the U.S. mail or a wiring service, respectively, are used to further a fraud scheme—whether it originated in person, through the mail, by telephone, or over the Internet. In many cases, these violations are associated with other areas of fraud. For instance, a Ponzi scheme investment opportunity may be marketed through the U.S. mail with "investment" payments made through a wire service. 

    Most of the schemes—such as fake check, foreign lottery or mystery shopper scams—are perpetrated through an advance-fee scenario; the targeted consumer is enticed to send money first in anticipation of a much greater reward, opportunity, or return that is never realized. 


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