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6 Common Types of Financial Fraud to Look Out For


The Importance of Building Your Own Savings

December 11, 2023

Financial scams are common today and criminals are becoming more advanced all the time. There are many types of fraud and it pays to know what they are. This will prepare you to recognize them. There are measures you can take to reduce risks once you know what fraudsters can do.

1. Identity theft

Identity theft is when fraudsters use your personal information to get access to your accounts. They can easily buy your credentials on the dark web or get them through data breaches or phishing attacks. Bank frauds examples include the attacker changing your password to lock you out of your account, making fraudulent payments or transferring your money to another account. If they get access to your credit card details, you may find suspicious charges on your account.

In times like these when cyber threats are rampant, optimum protection is important. This applies to all devices from smartphones to laptops. By using CleanMyMac, you can get rid of unwanted apps and malware on your Mac that can make your system insecure. This well-known Mac cleaner will free up its RAM memory and run maintenance scripts to make your apps more responsive. If you want to know how to delete apps, this tool will help you to mass delete them. You can also uninstall unknown apps and delete malware to make your device safer.

Make sure you don't log into your bank account from public Wi-Fi and always check that you log onto an authentic site rather than a fake one that looks like a real one. It's important to monitor your bank account statements on a regular basis. If you notice suspicious action on your bank account or credit card you need to report it to the impacted financial institutions so they can freeze your accounts.

2. New account fraud

Another form of financial deception is new account fraud. This is when a fraudster opens an account with the purpose of committing fraud. The person will steal an identity to open the account or use the identity of a deceased or homeless person. They may also create a fake identity which is a mix of legitimate and invented or stolen information. Once the new account is created, the person will write out checks in the person's name.

3. Application fraud

One of the money fraud crimes fraudsters engage in is to apply for lines of credit or loans. They will build credit slowly over months. Once they appear to be trustworthy, they will max out a credit card with no intention of paying back the money. Another method is to use automated bots to submit applications to different financial institutions at once. By the time the fraud is discovered, the fraudster has received the money and disappeared.

4. Charitable donations fraud

Scammers will rely on your empathy to scam you out of money. The money you donate goes straight to the scammer instead of to a worthy cause. They may try to fool you with a phishing scam where you receive an email that appears to come from a legitimate organization. Before you donate to any charity, look to see if it has a website and see whether it is registered as a non-profit organization.

5. Tax refund fraud

Accountants usually advise you to file your taxes early. One of the reasons for this is to help you avoid tax fraud. Tax fraud happens when someone steals your Social Security number, files your taxes, and receives a tax refund. They will report incorrect income to maximize the refund they receive. When you send in your return the IRS rejects it because according to them it has already been submitted. This kind of tax fraud is more common than you may think. In the 2023 season, the IRS reported over 1 million fraudulent tax returns.

6. Advance fee fraud

Advance fee fraud is when a cyber criminal requires you to pay money in advance for products or services. You may be promised better credit if you do this. The problem is that you never receive what you expected. In financial fraud cases like this, there usually isn't any way to get your money back. It's good to be aware of what could happen and look out for red flags like:

An offer that seems too good to be true.

Requests for unusual payment methods such as wire transfers.

Asking for prepayment for a service like securing a loan.

A request to sign a contract that states you will pay a fee at a certain point or one to sign a non-disclosure agreement.


When you know what types of financial crimes can take place, you are better prepared to deal with them. There are various measures you can take to reduce your security risks. One of these is closely monitoring accounts. Another is to keep strict control over your credit card and where you enter your credit card details.


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About the author

Smridhi Malhotra

Smridhi works as a freelance/remote white-label digital marketing services professional. In her 12+ years of work experience, she has worked with some of the top brands in the industry with a special focus on Tech/SaaS/Finance and local businesses category.

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