What You Should Know About Fraud Crimes, Part 2

Fraud. Fraud is a term that describes a false representation or allegation, either through conduct or words, that are considered false or dishonest. It also describes an instance where a party conceals something that should be disclosed to another party, with the intention to deceive others who may need to know about such information.

So, we should know that it is natural to assume that various types of fraud crimes exist. Therefore, in Part 2 of our look at fraud crimes, we are going to review several different types of fraud crimes.

Fraud Crimes: What You Should Know ~ Types of Fraud Crimes

As mentioned in our last part, fraud crimes deceive. No one wants to experience a fraud crime. Given the nature of certain markets, such as the online market, far too many people find themselves at the other end of a fraud crime.

Fortunately, fraud crimes are punishable by law. They are punished as a felony or misdemeanor, typically depending on the value of the stolen property and/or the nature of the crime itself.

Here is a look at the different types of fraud crimes:

Identity Theft

Identity theft is popular in an age where people commonly handle sensitive information online. Scammers who commit identity theft fraud steal personal information, such as Social Security numbers, names, addresses and phone numbers.

Notably, they are known for taking financial information – bank account and credit card numbers – from unsuspecting victims.

‘Pigeon Drop’ Schemes

This scheme involves a scammer tricking a victim (known as a pigeon) into giving them their money in order to win a larger sum of money.

It starts with the scammer telling the pigeon – the victim – that they have won a large amount of money, usually through a contest. In order to ‘receive’ that money, the scammer then tells the pigeon that they need them to ‘pay an entry fee’ in order to prove to the game operators that they (the scammer) would pay up if they had lost. Finally procuring the money would allow the scammer to ‘split’ the winnings with the pigeon.

Once the pigeon loans them the money, however, the scammer takes the money and disappears.

Ponzi Schemes

Ponzi schemes exploit people who want to make money through investments. It involves scammers promising ‘safe and large returns’ to those who commit to their investment scheme.

This scheme relies heavily on recruiting people to participate in the scheme—otherwise known as an investment. The person at the helm of the scheme (the scammer) often pockets what they earn (from investors) and uses a small portion of that money to keep early adopters satisfied. Once new investors part with their invested money, they rarely see it again.

Mail Fraud

This illegal scheme involves using mail to ‘hook’ unsuspecting victims into participating into fairly ‘innocuous’ schemes that are actually fraudulent in nature.

Due to the nature of mail fraud schemes, mail correspondence in the United States is fairly regulated (in accordance with the Constitution) to prevent mail schemes from flourishing throughout the country.

What You Should Know About Fraud Crimes, Part 1

The nature of fraud, undoubtedly, makes it a crime in many jurisdictions, including the United States legal system. Due to the inherently dishonest nature of this crime, various legal systems across the country prosecute people for engaging in different types of fraud.

The most common types of fraud occur in financial transactions. Buying and/or selling property or exchanging funds for intangible (nonphysical) assets or commodities are common financial transactions where fraud may occur.

It is natural to assume that various types of fraud crimes exist. Therefore, in Part 1 of our look at fraud crimes, we are going to review some examples of fraud crimes.

Fraud Crimes: What You Should Know ~ Scenarios

Fraud crimes deceive. They deceive unsuspecting victims into giving up money or property (tangible and intangible) to the deceptive party.

Although fraud crimes are commonly associated with deceiving victims in that manner, a fraud crime also occurs when an offender fails to disclose important information or if they make assertions without confirming whether they are accurate or not.

Here are some common examples of fraud crimes:

Scenario 1:

A party runs an advertisement targeted at homeowners who may have back mortgage payments. These consumers may be unable to pay back their mortgages on time. The fraudulent party, via the advertisement, promises these homeowners that they ‘can prevent foreclosures.’ This party, to those that answer the advertisement, tells their customers to sign documents that temporarily transfer their title to said party. They would, once the transfer is complete, negotiate for ‘lower mortgage payments’ on their behalf.

The issue with this example is that the fraudulent party is dishonest about the nature of the title transfer. In this case, the title transfer would be permanent, and not temporary, which would put the customers at danger of losing their home and financial stability.

Scenario 2:

A party sells a used car to their customer enough—the transaction is innocent enough. However, there is a catch.

This party knows, but does not inform their customer, that the car lacks the proper equipment as required by their state to allow its use as a ‘drivable’ vehicle. Therefore, the car cannot be driven in their state—but, the customer does not know that.

The issue with that situation is that, as mentioned, the customer does not know they cannot drive their car in their state. Once they drive the car, they may be subject to prosecution by police if they are pulled over for driving an illegal car.

In both scenarios, the fraudulent party put their customers at stake of committing a crime that they did not know they could commit. Since they were dishonest in conveying specific information to them, those parties committed a fraud crime and would need to be prosecuted for doing so.