Fraud and Scams – There’s a big difference

By Dawn Kellogg

We hear the terms “fraud” and “scam” often and sometimes interchangeably. Both are ways of separating honest people with their hard-earned money, and no one wants to be a victim of either. However, the two are not synonymous.

What is Fraud?

Fraud is regularly used as a broad term which covers any intentional dishonest activity, but in the financial world, is defined as account activity made without the participation of account holders,such as account charges that the account holder didn’t make. A criminal will typically acquire someone’s personal or financial information through unauthorized access such as hacking a merchant’s website.

Some examples of common fraud:

• Identity theft
• Unauthorized debit/credit card usage
• Tax fraud
• Investment schemes
• Mortgage fraud

What is a Scam?

A scam is a fraudulent scheme generally involving money or a business transaction. Scammers try to trick someone into providing money or personal information.

Unlike fraud, where a criminal will typically acquire someone’s personal or financial information through unauthorized access, in a scam, people are tricked into willingly sharing their financial or personal information. Maybe they’ve been told to pay for an overdue bill through a peer 2 peer provider, or a call from computer support informs them that their device is compromised and they must pay to have it fixed right away, or their financial institution unexpectedly calls and asks for non-public information, or they are asked purchase gift cards for a scammer as a “payment” for a bill, or they willingly have given account access to someone who then withdrew money.   

Scams can come to us via phone, email, or even in person.

Some examples of common scams:

• Investment scams
• Job/work from home scams
• Tech support scams
• Dating and romance
• Phishing
• Messaging scams or “smishing”
• Charity scams
• Marketplace or reseller scams

What to do if you are (or suspect that you have been) a victim of fraud or a scam:

• Stop all communication immediately. Don’t respond or engage with the scammer.
• Contact your credit union, bank, or credit card company to put a stop to the account.
• If any PIN numbers or login details were exchanged, change them immediately. Use strong, unique passwords for each account.
• If the scammer used false representation of a company, contact that company to notify them of impersonation and potential fraud.
• Report the scam or fraud to the FTC.

Anyone can be a victim of a fraud or a scam. Here are some tips to help you protect yourself:

• Keep an eye on all transactions, especially when dealing with new or unexpected requests.
• Review credit union, bank, and credit card statements regularly to spot any unauthorized transactions.
• Never click on links or download attachments from unknown or suspicious senders or sources.
• Don’t share sensitive information, especially with unsolicited requests. Use secure, online payment providers when completing transactions.
• Before giving out any information or making a transaction, make sure that they request is legitimate by contacting the organization directly or checking official channels.
• Ensure that your devices have up-to-date antivirus and malware software.
• Consider credit monitoring services, which may be helpful in detecting unusual activity.
• Keep up to date with the latest scam and fraud tactics and schemes. Visit the FTC to be better prepared.

At The Summit, the safety of our members is paramount, and we take fraudulent activity and scams very seriously. We regularly monitor members’ accounts, and we have several safety features to alert members of account activity.