The Financial Fraud Definition Cheat Sheet

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Do you ever feel like you need a special dictionary for all the types of financial fraud out there? Well, here is your 2015 version.

The Government Imposter Scam

These con artists impersonate government officials or offices and threaten imprisonment, arrest, deportation or a lawsuit if you don’t pay them immediately, over the phone, for a fake debt. Some popular imposter scams are committed on behalf the fake “National Sweepstakes Bureau,” the Federal Trade Commission (FTC) and the Immigration Department. The IRS has been warning about IRS phone scams and says the IRS will never call taxpayers and instead sends correspondence via snail mail.

Synthetic ID theft

Consider that traditional identity theft happens when someone steals all the personal information of one person and uses their identity to open accounts or steal money. “Synthetic identity theft” differs in that the thief creates a completely new identity using bits and pieces of several people’s stolen identities. It is even harder to detect because it’s not related to the information of any one person.

Grey Charges

Have you ever seen small charges on any bill or bank statement and have no idea what they are for? These are called “grey charges” and usually turn out to be subscription charges you did not intend to purchase or when a free trial converts to a paid subscription because you forgot to cancel it. If you don’t know what a charge is for, call the company named in the description of the charge, dispute it and ask to have it immediately reversed.

Zombie Fees

These are a type of “grey charge” that appear when you cancel a subscription or membership and the fee is still being charged in the following months. Keep good records of the date you cancelled any membership or subscription.

Negative Option

This “grey charge” appears when you ordered a product online, but were really buying more than just the one product. You can be switched to these optional services unless you say, “No” when asked about this option by telemarketers.


These “grey charges” pop up on your  wireless phone bill for charges authorized by “carrier billing” meaning you can order wallpapers, ring tones and subscriptions  from your phone (even from a text message) and charge them to your phone bill. You are most at risk for cramming if you do not receive monthly bank statements (and are unbanked or primarily using a prepaid debit card) and those who auto-pay bills or use a pre-paid service and are not checking monthly bills. But, the FTC reports that these charges are hard to identify on statements and troublesome to refund. AT&T will pay $80 million and T-Mobile will pay $90 million to settle suits brought by the FTC in 2014 for cramming charges onto customers’ phone bills. Ask your cell phone carrier to block third-party charges.

Affinity Fraud

This type of financial fraud is usually an investment scheme perpetrated by (supposed) members of a group, such as your church group or any social or civic organization. People fall for these investment or charity schemes because they trust the others members of their group who are promoting them. Before donating or investing any money, always research any cause yourself.

Shoulder Surfing

You’ve heard of those who lurk at ATM machines or gas stations hoping to get a glimpse of your PIN? Well, “shoulder surfing” also exists everywhere you are using your mobile devices in a public Wi-Fi spot. Be aware of your surroundings as you type any passwords in public and especially stay out of your financial accounts while using public Wi-Fi.

Spear Phishing

With regular “phishing” you receive an email urging you to click a link and enter your personal information. “Spear phishing” is even more targeted in that the thieves may already have some of your personal information so they send you a fake email from a company they know you do business with, increasing the likelihood you will click on the link to enter your password, account numbers or other identifying information. Legitimate companies will never email you and ask you for your password or your account number.


How often do you receive friend requests from people you do not know?  Don’t accept them. If you accept the friend request, the fraudsters use your social media profile to parse information about you and others in your friend or follower lists and they will most probably try the same scam on all of your friends. Keep your private identifying information off social media sites.


Have you ever opened up a cell phone bill only to find it is not from your usual carrier? “Slamming” is when a company switches your phone service without your consent. Ask your phone company if it offers a blocking service of not allowing any changes to your phone bill.

A scam by any other name is still a scam. Now that you know all the different ways thieves are out to scam you this year, verify every bill and every communication you receive via phone, email or snail mail before supplying any personal information or paying any money.

Posted in Finance
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