Fraud Types A-E

Account takeover

An account takeover happens when a fraudster poses as you and gains control of your account.The fraudster then uses your account to make unauthorised transactions.

Any type of account can be taken over by fraudsters, including:

  • Your bank account
  • Your credit card account
  • Your email account

Online bank accounts are usually taken over following a phishing scam, or by computer spyware or malware.

Application fraud

Application fraud happens when fraudsters open an account or apply for a service using someone else’s name. This is a result of identity fraud.

Bank account fraud

Does your bank statement show transactions you have not made?

You may be a victim of bank account fraud. Bank account fraud can happen as a result of identity theft if your bank cards or other bank account information have been stolen.

Bank card and cheque fraud

If your bank account information, bank cards or cheque book are stolen, fraudsters can gain access to your money.They might take money from your account or run up credit in your name. And you might not realise until you check your bank statement or your card is refused when you try to use it. Do you know how fraudsters can steal money from your bank account?

Benefit fraud

Benefit fraud is a criminal offence that occurs when someone lies to obtain state benefit they are not entitled to or deliberately fails to report a change in their personal circumstances. This means that anyone who has committed benefit fraud can be prosecuted and, if convicted, receive a criminal record.

Examples of benefit fraud are:

  1. Someone claiming housing benefits when they are not entitled to them, or claiming for more than they are entitled to.
  2. Someone claiming disability allowances when they are not entitled them.
  3. Someone claiming a carer’s allowance when they are not entitled to it.
  4. Failing to tell the authorities about a change in circumstances that means they are no longer entitled to benefits.
  5. Benefit fraud is not a victimless crime.
  6. Benefit cheats are stealing from everyone who pays taxes and who claims benefits legitamately, including the people who need it most.
  7. If you are told you are claiming benefits when you are not you could be a victim of identity theft, whereby fraudsters are claiming benefit in your name.

Consequences of benefit fraud:

  • Prosecution
  • Paying the stolen money back
  • Criminal record
  • Fine
  • Termination or reduction of benefit
  • Loss of home or possessions
  • Prison sentence

Betting Fraud

Betting fraud could involve betting on any sport. Often it involves horse racing. Betting fraudsters will pose as experts and offer you ‘inside information’ or a ‘foolproof’ way to win. They might offer to send you confidential information if you pay a subscription fee. Or, rather than pay a fee, they might ask you to use your money to place a bet on their behalf and send them their winnings. 

Boiler room fraud

Boiler room fraud is the same as share sale fraud. It is also known as hedge fund fraud or bond fraud. This type of fraud involves fraudsters cold calling members of the public to try to get them to buy shares which are either worthless or do not exist. Boiler room fraudsters pose as stockbrokers and contact members of the public, using hard-sell techniques to offer investment opportunities in the form of shares. During your dealings with the fraudsters they may refer you to a fake website or present fraudulent share certificates and other false documents, all in order to make the investments seem valid. They may also claim to offer ‘secret’ stock tips, special discounts or free research reports. Be wary, boiler room fraudsters try to pressure people into purchasing shares by rushing them into quick, spur-of-the-moment decisions. Fraudsters also try to make their business seem legitimate by using technical jargon and introducing themselves with impressive job titles to imply they have authority. Once they’ve taken your money, boiler room fraudsters quickly disappear so that they can’t be contacted.

Business directory fraud

Business directory fraud happens when a business receives an official looking letter or form in the post, email or fax offering a “free” listing in a business directory. You may be asked to check particular details about your business, or be informed that an employee of yours has requested the form to be sent. The letter/form requests that you send it back even if you do not want to place an order. The listing is not “free” and in the small print, it will state that by signing the form you are committing to an order. If you sign and return the form, you are agreeing to pay for on-going entries in the directory, which often cost hundreds of pounds per year. Fraudsters will try to retrieve this debt by sending threatening 'debt collection' letters to the company.

Business trading frauds

Business trading frauds include long and short firm fraud as well as insolvency and bankruptcy related frauds.

  1. Long Firm Fraud is normally where a seemingly legitimate business is set up with the purpose to defraud its customers and suppliers after a relatively long period of time. This has usually involved the creation of a relationship where a fraudster initially pays for orders having supplied false details such as credit references and filed accounts to obtain credit. They then victimise the companies by placing large orders, which they fail to pay for.
  2. Short Firm Fraud occurs when fraudsters use a dormant or off-the-shelf company, and file fake accounts at Companies House. They then apply for goods on credit across multiple suppliers and fail to pay for the goods. Short firm fraud is often internet related.  

Call centre fraud

Call centre fraud occurs when fake call centres are set up or existing legitimate call centers are hacked in order to steal sensitive personal information from customers. Fraudsters will use these call centres to commit fraud such as identity fraud.

Career opportunity scams

A career opportunity scam is when people respond to false job advertisements posted by fake companies. It might offer a business opportunity or self-employment that lets you work your own hours to earn a high income. The main examples of this type of scam are casting or model agencies all promising to launch your career quickly and earn you lots of money. The scam will begin with an initial consultation which will require cash up front. The fraudsters will give many reasons for this such as, set up fees and research costs. This type of scam becomes fraud when money is lost.

Cashpoint fraud

It is usually safe to use a cashpoint but sometimes they are targeted by fraudsters.

PIN reversal scam

There is a common online scam advising people to insert their PIN number in reverse order to alert police if they are being threatened to withdraw cash.

This is a hoax and falsified information and we ask you not to act upon this.

If you do find yourself being threatened in this manner, we strongly recommend you contact the police.

Charity donation fraud

Charity donation fraud is when fraudsters act on behalf of a charity that doesn’t exist to obtain money from members of the public or they claim to be acting on behalf of a genuine charity but keep the money donated for themselves. In both instances the request for donations is often linked to a recent, high-profile event such as a natural disaster.

The various means of donating carry a number of implications:

  1. Online donations: fraudsters can record your bank or credit card details and use them to facilitate purchases on your account.
  2. Telephone donations: calls may be directed to a premium rate number which means you will be charged a hefty sum for the call as well as the money from your donation.
  3. Donating items: if you donate household items or clothing, fraudsters will sell the items and keep the money they make.

Charitable publication scams

A telesales agent will call a business selling advertisement space in a fake publication for a seemingly good cause. The caller will give the impression that the publisher is affiliated with local charities, emergency services, crime prevention and community health initiatives. The caller will sometimes say that a previous order has been placed or that someone else in your business has agreed to take out advertising space. Rogue publishers may send invoices to businesses who had said no to their telephones sales pitch or follow up the invoices with threats of legal action.

Cheque fraud

Deposit fraudulent or stolen cheques into your account. What to do if you are a victim of bank card or cheque fraud? Contact your bank. Look on your account statement for your bank’s 24-hour emergency telephone number. Report lost or stolen cards, cheques or chequebooks immediately.If you suspect your card has been used fraudulently, report it immediately.

There are three main ways fraudsters steal cards and account information at cashpoints:

  1. Card-trapping devices- These are inserted into the cashpoint’s card entry slot to trap your card in the cashpoint so that you can’t carry out your transaction. The fraudsters will try to find out your PIN by: Looking over your shoulder. Using a miniature camera fixed above the keypad. Pretending to be a helpful bystander and convincing you to re-enter your PIN while they watch. When you give up and walk away, they will remove your card and use it to withdraw cash or buy goods.
  2. Skimming and pinhole camera devices: Sometimes skimming takes place at cash machines where tampering has occurred and a skimming device has been fitted. You will often be unaware of this kind of fraud until your statement arrives showing purchases you did not make. Fraudsters insert skimming devices into a cashpoint’s entry slot to copy your card’s electronic data. They will also try to find out your PIN, perhaps by using a miniature camera to record it as you carry out your transaction. They can use your card details to make a fake magnetic strip card to use with your PIN.
  3. Shoulder-surfing: A fraudster may watch you enter your PIN then steal your card, perhaps while distracting you. LINK ATM’s cardholder security advice:
  • Avoid using an cashpoint if there are suspicious looking people around it.
  • Check to see if there are any suspicious looking devices or evidence that the cashpoint has been tampered with.
  • If there are any additional attachments over the card entry slot, do not use the machine and alert the police immediately.
  • Always shield your PIN with your hand and stand close when typing it in.
  • If your card gets jammed or retained, report it immediately to your bank or building society.
  • Do not leave the cash point and use your mobile phone to make the call.
  • Be aware of your surroundings and make sure others in the queue are a good distance from you.
  • Never reveal your PIN to anyone, even if someone claims to be from a bank.
  • A bank will never ask for your PIN.Be cautious of strangers offering help or distracting you whilst using a cashpoint, even if your card is trapped in there.
  • Regularly check your account to make sure there is no suspicious activity.

Cheque fraud

Any illegal use of cheques to obtain or borrow money is fraud.

There are many different types of cheque fraud, including:

  • Counterfeiting, forged cheques
  • Fraudulently altered cheques
  • Kiting, paper hanging
  • Bad cheque writing
  • Cheque washing
  • Using disappearing ink on cheques

Cheque overpayment fraud

Fraudsters often use cheque overpayment in employment scams or in transactions for goods and services sold through classified adverts. Often the fraudster is reimbursed for the overpayment before you discover the cheque was not genuine.

If you are an individual rather than a business, this type of fraud is called advance fee fraud.

Charitable publication scams

A telesales agent will call a business selling advertisement space in a fake publication for a seemingly good cause. The caller will give the impression that the publisher is affiliated with local charities, emergency services, crime prevention and community health initiatives. The caller will sometimes say that a previous order has been placed or that someone else in your business has agreed to take out advertising space. Rogue publishers may send invoices to businesses who had said no to their telephones sales pitch or follow up the invoices with threats of legal action.

Types of Card fraud: 

  • Lost and stolen fraud - A card is physically stolen from your wallet or home, or you lost the card. A criminal then poses as you to obtain goods and services. Most of this type of fraud takes place before you have reported the loss.
  • Counterfeit card fraud (skimming) - A counterfeit, cloned or skimmed card is one that has been printed, embossed or encoded without permission from the card company, or one that has been validly issued and then altered or recoded. Skimming can occur at retail outlets – particularly bars, restaurants and petrol stations – where a corrupt employee puts your card through a device, without your knowledge, that electronically copies the data from your card's magnetic stripe. Sometimes skimming takes place at cash machines where tampering has occurred and a skimming device has been fitted. You will often be unaware of this kind of fraud until your statement arrives showing purchases you did not make.
  • Card-not-present (CNP) fraud – This includes fraud conducted over the Internet, by telephone, fax and mail order. It is perpetrated when criminals obtain card details through the theft of your card details from discarded receipts or by copying down your details during a transaction. It is now the largest type of fraud in the UK.
  • Mail non-receipt card fraud – This type of fraud involves your card being stolen in transit, once it has been sent out to you from your bank or building society. At particular risk for this type of fraud are properties with communal letterboxes, such as flats and student residence halls. Identity theft on cards – this occurs when a criminal uses your fraudulently-obtained personal information to open or access card accounts in your name.
  • Automated Vending Carts (AVCs)- These are websites dedicated to the sale of compromised financial data. These sites may appear professional in appearance, operating a ‘click and buy’ procedure allowing criminals to order and purchase large volumes of compromised cards with relative ease.
  • False accounting fraud- False accounting fraud is overstating a company's assets - or understating its liabilities to make it appear financially stronger. It is a criminal offence. 

False accounting fraudsters may falsify records, alter figures or keep two sets of financial accounts for various reasons, including:

  1. To obtain additional financing from a bank.
  2. To report unrealistic profits.
  3. To inflate the share price.
  4. To hide losses.
  5. To attract customers by appearing to be more successful.
  6. To achieve a performance-related bonus.
  7. To cover up theft.

Click fraud

Click fraud is a type of illegal internet crime that occurs when individuals or automated programmes click on pay per click (PPC) advertisements in order to inflate a company’s advertising bill. PPC is advertising used on websites, where advertisers pay their host only when the ad is clicked on. When the pay-per-click advertising limit is reached, the adverts and links are no longer displayed. Click fraud therefore affects companies rather than individuals who lose money each time their advertisement is clicked on. Competing advertisers will sometimes attempt to drive up their competitors' marketing costs by clicking on their ads. Click fraud can be committed through an automated script or programme. 

Companies – fraudulent

Setting up a shell company or using a legitimate company can support fraudulent activity. A shell company is a company that exists but does not actually do any business or have any assets. Sometimes these shell companies are used as a front for tax evasion.

Computer hacking

Computer hackers use their advanced technological skills to break into computers and computer networks. People who engage in computer hacking activities are often called hackers. Fraudsters will break into a computer or computer network to steal sensitive information that they can use to commit fraud.

Corporate Identity Fraud

Companies and company directors can also fall victim to identity fraud. Companies House, Business Link, and CIFAS (the UK's Fraud Prevention Service) all provide information to help businesses protect themselves.

  1. Companies House: One way that criminals have been known to commit corporate identity theft is by fraudulently changing a company's registered details at Companies House.
  2. Business Link: The Business Link website has comprehensive information for businesses on how to deal with IT security risks, keep systems and data secure and avoid scams.
  3. Businesses can sign-up on the Identity Theft website to receive an extensive range of identity theft training materials, to help you protect your business from the crime.

Corporate services fraud

Corporate service fraud occurs when fraud is committed against any company by its employers or service providers. For example, lawyers, accountants and surveyors.

Corporate services frauds include such things as:

  • Procurement fraud
  • Travel and subsistence fraud
  • False accounting
  • Exploiting assets and information
  • Payment fraud
  • Personnel management fraudand Receipt fraud

Credit and debit card fraud hurts people

When credit/debit cards – or the personal information on them – are stolen they can be exploited by fraudsters. Although the financial cost of card fraud is largely borne by the banking industry, the personal cost in time, inconvenience and frustration while an incident is investigated – being without cards, waiting for fraudulent expenditure to be reversed or offset, the sense of violation – is immeasurable. A person who is a victim of credit or debit card fraud suffers the same distress and sense of violation as a victim of burglary.

Domain name scams- Domain name scams occur when a fraudster offers a business first refusal on a domain name, saying that another company is interested in it. The fraudster will phone a company usually saying it is a courtesy call to see whether they would like to buy the domain name. The caller will often mention that he/she has other buyers interested and pressurise the company into making a decision quickly. The fraudster will then charge an excessive fee for a domain name when no third party ever existed. Another form of domain name scams is called domain renewal notices. This happens when a fraudster sends a bogus letter mentioning that a domain name is up for renewal. The fraudster will then charge an excessive amount for this renewal.

Doorstep electricity meter credit scams- Doorstep electricity meter credit scams – or electricity fraud - involves fraudsters offering cut-price energy to those with pre-payment electricity meters. Fraudsters approach people door-to-door offering cheap electricity meter top-ups, such as £50 worth of electricity for only £25. However, energy suppliers can check their records and see that they’ve not received the supposed payment and the customer eventually ends up paying twice for their top-up. Fraudsters involved in doorstep electricity meter credit scams are believed to have links to serious and organised crime.

Door-to-door sales fraud- Door-to-door sales fraud involves fraudsters approaching you at your home. Be aware that there are legitimate businesses that approach potential customers door-to-door, but there are also fraudsters who use this method to target victims.

Door-to-door sales fraud can be broken down into the following categories:

  • Fraudulent charity collections
  • Bogus consumer surveys
  • Substandard or overpriced home renovations or maintenance services
  • Pressurized or forced selling
  • Misleading contracts

These types of fraud all involve fraudsters trying to sell products or services which are either extremely poor quality or are never received by the customer.

Employee/internal Fraud- Internal or employee frauds are when fraud is committed against an organisation or company an individual is working for. The majority of staff in any organisation are trustworthy. But some members of staff may act dishonestly, wrongfully fail to disclose information, or abuse their position of trust for personal gain or to cause loss to others. Staff have access to personal data of other employees, including payroll data, as well as information about customers. Staff fraud can even be linked to serious organised criminal networks or terrorist financing. This includes theft of cash or property within the organisation. Some organised criminals will place individuals in an organisation for the sole intention of committing fraud. Popular targets are IT departments, call centres and warehouses. You may wish to consider accessing the CIFAS Staff Fraud Database, which employers can use to file data about staff fraud cases and access staff fraud records filed by other CIFAS members.

Employment fraud- or recruitment scams - are when fraudsters claim to be an employer or a representative from a recruitment agency and hire someone for a job that doesn’t exist. Fraudsters use internet job sites to obtain CVs and personal details of members of the public who they then contact with a job offer. On occasion, fraudsters will ask the victim to complete a questionnaire or take part in a telephone interview before being told that the job is theirs. After telling the victim that they’ve been successful in their job application, fraudsters contact them to make supposedly necessary arrangements. Often the ‘job’ that the applicant has been offered is based abroad, so arrangements for visas, travel and accommodation are discussed. Victims are referred to an agency who, for a fee, can help with these arrangements. The fraudulent agency then try to obtain as much money as possible from the victim without making any of the arrangements the person has paid for. They may initially charge a deposit for accommodation, before charging a fee for visa administration for example.

Energy Fraud- Energy Fraud is committed by criminals masquerading as existing or fake energy companies who con residents or companies into paying bogus fees or permitting the fraudsters to tamper with their meters. Sometimes they will sell a product or service that doesn’t really exist. Energy Fraud sees criminals hiding behind a hijacked brand name and using their reputation and relationship with customers to lull them into a false sense of security to part with their money. Like most fraud, criminals committing energy fraud take advantage of vulnerable people and tricking them into making a bad decision.