Fraud: What It Is and How to Protect Yourself

It’s International Fraud Awareness Week! What’s that, you ask? We’re here to tell you. International Fraud Awareness Week is a global time when companies, organizations and policymakers push to minimize the impact of fraud on innocent victims by sharing anti-fraud educational content and creating a space for open discussion regarding fraud-related topics.

What Is Fraud?

Before we jump in, let's define fraud. The term fraud refers to any intentional deception or misrepresentation made for the purpose of financial or personal gain. It can take many forms and occurs in various contexts, but is always insidious and can cause significant damage before victims even realize what’s happening.

People commit fraud for a variety of reasons, but it typically comes down to the Fraud Triangle, which hypothesizes that people commit fraud if these three components are present: financial pressure, perceived opportunity, and rationalization (the ability to justify the fraud to oneself). This makes for a perfect storm, in which fraudsters take advantage of unsuspecting victims.

The Federal Trade Commission (FTC) theorizes that there were over 2.6 million fraud attempts in the U.S. in 2023 that accounted for a net financial loss of more than $10 billion. If you think this can’t affect you, think again. According to Gallup, financial scams are amongst the most common crimes that U.S. adults fall victim to. While risk remains high, the precautions below can help mitigate the risk of falling victim to fraudulent activity.

How to Protect Yourself

Monitor Accounts Closely

It’s important to frequently and closely monitor your accounts. Regularly check your banking and credit card apps and review your monthly statement closely to make sure there’s no unexpected activity. Don’t forget to check online accounts like Amazon, and other online marketplaces and subscriptions to make sure your financial information is safe. Lastly, if possible, enable transaction notifications on your mobile device so you can act quickly if your finances are compromised. Of course, if you notice suspicious activity, contact your financial institution immediately.

Protect Personal Information

Be cognizant of the risks of sharing your personal information online. Ensure websites and online contacts are secure and trustworthy before providing information including your birthdate, social security number, account numbers or passwords. Sharing this information with the wrong people or organizations can lead to the perfect storm for fraudulent activity to occur.

Use Strong Passwords

We get it. Using the same password for everything can feel like it’s simplifying your life. But the truth is, it increases the risk of compromised accounts exponentially, which could, in extreme cases, leave you vulnerable to data breaches and fraudulent activity.

When setting passwords, use a variety of characters, including numbers, symbols, and case sensitive letters. The minimum recommended password length is 14 characters, but the more characters used, the more secure your accounts will be. Avoid passwords that fraudsters can easily guess, like password, patterns such as 123456, significant others’ or family members’ names, birthdays, or milestones. Lastly, do not write your passwords down, especially in places that are easily found.

Be Cautious Online

In an increasingly digital era, forming relationships online can feel like second nature. It’s easy to feel like you know online friends and acquaintances, but it’s important to always use caution online. If possible, avoid sharing personal information with strangers before meeting in person. It may seem extreme, but sharing information like your parents’ names, where you grew up, your birthdate, or where you went to school can lead to falling victim to fraudulent activity.

Similarly, it’s important to be wary of opening unexpected and suspicious emails. Email scams, also known as phishing scams, are attempts to trick people into sharing personal or financial information that can be used for fraud. Phishing attempts may come from email addresses that look trustworthy--often impersonating legitimate companies, friends or family, luring people to open links or share personal information.

Report Suspicious Activity

When it comes to fraud, it's important to always be on guard and pay attention to telltale signs. Here are a few to look out for:

• First, scammers will often emphasize a sense of urgency. They may urge you to act as quickly as possible to avoid any opportunities for critical thinking.
• Second, they’ll likely spare as many details as possible. If you think things aren’t adding up, you’re probably right.
• Lastly, be on the lookout for glaring spelling or grammatical errors.

If you notice any of these telltale signs, or other suspicious activity, move quickly and report it immediately to relevant authorities, such as the relevant financial institution, credit card company or the Federal Trade Commission.

Summary

While fraud is a very real threat, you’re already starting to take the necessary precautions to protect yourself just by reading this. Continue to educate yourself, take the necessary precautions mentioned above, and do your own research. Fraud is not so daunting when you’re informed and prepared. And remember to always stay vigilant, not just during International Fraud Awareness Week.

Stay tuned for more blogs from us this week as we cover topics including romance scams, ransom scams, and more.