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The five most common types of fraud

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Make sure you don't get caught out by these five types of fraud....


Fraud is becoming an increasingly common problem. So just what are the most common types of fraud? Here are five of them.

1. Online shopping and auction fraud

Online shopping is very convenient. However, the downside to shopping online is, of course, the risk of fraud. In most cases, if you’re buying something online, you’ll have to enter your debit or credit card details as well as your personal information. And if anyone gets hold of this information, they can steal your identity pretty easily.

Similarly, if you use auction sites such as eBay, there’s always a risk that you could get caught out as scammers come up with more inventive ways to swindle you out of your hard-earned cash. So make sure you find out how to avoid being scammed on eBay.

2. Advance-fee frauds

In a nutshell, advance-fee fraud requires you to hand over money upfront in return for a much larger sum of money. One of the most common examples is the Nigerian 419 scam. Here, you’ll receive an email from what appears to be businessmen or officials from Nigeria or another African country offering to transfer large sums of money into your bank account to get it out of the country.

You’ll be told you can keep a large chunk of this cash, providing you pay a fee first. However, if you do this, you’ll never see that money again.

Other examples include employment scams where you might be asked to hand over a fee to a recruitment agency in return for CV services, interview coaching or preferential treatment. And psychic scams where you’ll need to pay a hefty fee for a psychic reading.

3. Application frauds

At number three, we have application frauds, in which fraudsters take out financial products, such as loans or mobile phone contracts, in your name.

All it takes is for a fraudster to get hold of documents such as utility bills and bank statements (which you might have thrown in the bin) and they can then build up useful personal information, helping them to make an application at a later date.

4. Non-investment fraud

An example of this is miracle health cures. This is where you see an advert online or by email which claims to provide a miracle cure for everything from minor complaints to serious illnesses. It’s particularly targeted towards people who have had no luck with conventional treatments.

Of course, if you hand over your cash, you’re unlikely to ever receive your order, or if you do, the treatment will have no effect or actually be harmful. So always be very wary about buying medicines online.

5. Online dating fraud

If you’re using an online dating site, be careful. Scammers often create attractive profiles to lure in victims. In some cases, they might pretend they are from the UK and are working abroad, while in other cases, they will say they live overseas.

The scammer will then tell you he/she is in serious trouble (perhaps he/she has been robbed and beaten) and needs cash urgently, in an attempt to get you to hand over your bank details. Of course, if you send over some money, you’ll never see it again.

Protect yourself

So just how can you protect yourself from getting caught out? Check out these top tips.

  • As a rule of thumb, if it sounds too good to be true, it probably is. So always question whether you think something is really legitimate.
  • It might sound simple, but remember if you didn’t enter a lottery, you can’t have won a prize.
  • If you’ve received an email which includes personal details such as an account number, always check to see if they match the ones you have been given.
  • Your bank will never ask you for personal or financial details or ask you to confirm your full password, so don’t hand them over.
  • Always install up-to-date anti-virus software and a firewall to protect your PC – you can find out more about this in 14 ways to protect your privacy.
  • Be careful when using social networking sites such as Twitter, Facebook and MySpace. Don’t put too much personal information on these sites, don’t advertise the fact that you’re on holiday and always ensure your privacy settings are high.
  • If you’re shopping online, always ensure the website you’re using has a postal address. If it doesn’t, or the address is a P.O. Box, you’re better off doing your shopping elsewhere. And when you pay for your purchases, make sure there’s a padlock symbol on the screen and the web address changes to ‘https://’ as opposed to ‘http’.
  • Sign up to Verified by Visa or MasterCard Secure Code whenever you are given the option when shopping online. You’ll need to register a password with your card company and by doing so, you’ll have that little bit of extra security.
  • Don’t be afraid to ask questions if you’re unsure about anything. If the company is legitimate, you shouldn't feel pressurised into making a decision, and the company will be happy to answer your queries. If it’s a scam, the more questions you ask, the more likely it is the fraudster will simply give up!
  • Be very wary about handing over personal information to people you don’t know, particularly if you’re being asked to give money upfront.

Finally, if you have been targeted by a fraudster and have lost money, make sure you report it to Action Fraud or call 0300 123 2040.

This is a classic lovemoney article that has been updated

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