Loanfactz Definitions

Fraud

Fraud is when a person or business intentionally deceives another person with promises of goods, services, or financial benefits that do not exist, were never intended to be provided, or were misrepresented. Typically, victims give money but never receive what they paid for.

Fraud is a crime.

Anyone can be a fraud criminal, and anyone can be a victim of a fraudulent crime. Most con artists make a career of their criminal activities. Some even join professional organizations to legitimize their schemes and project a respectable front. As many as 24 million people in the United States are victims of fraud crimes each year, according to a 1994 Department of Justice research report. The estimated cost of those crimes is more than $45 billion annually.

Why Are Fraud Crimes Underreported?

Although fraud victims are not alone, they often suffer their losses alone and in silence. Shame, guilt, embarrassment, and disbelief are among the reasons that only an estimated 15 percent of the nation's fraud victims report their crimes to law enforcement. Other reasons include victims' doubt about their own judgment, a sense of betrayal, and fears about how their family members, friends, and business associates will react. Some victims feel their losses are not large enough to report, do not want to get involved, think law enforcement agencies will not take the crime seriously, or think nothing will result from reporting the crime. Many victims feel they have only themselves to blame. In reality, calculating, skilled perpetrators are to blame for these criminal acts.

Common Types of Fraud

The weapon of choice for fraud criminals is not a gun or a knife. Rather, it is most often a telephone, letter, glossy publication, or brochure offering free vacations, merchandise, investment opportunities, or services. Not all frauds involve the direct selling of goods to consumers. Some frauds target institutions or businesses.

Examples of Federal Fraud Crimes
Telemarketing fraud - telephone solicitation for phony goods or services
Mail fraud
Health care and insurance fraud
Pension and trust fund fraud
Credit card and check fraud - including fraud by impersonation resulting from theft of mail or credit cards
Fraud related to securities, commodities, and other investments
Banking fraud
Embezzlement
Pyramid schemes
Advance fee schemes
Internet fraud

References:
United States Department of Justice
www.ojp.usdoj.gov/

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