Fraud Risks And What You Do For Protection
Avoid becoming a victim of fraud. Learn about prevention strategies to avoid identity theft and the resulting credit frauds.Fraud Has Many 'Faces'
Like art, fraud assumes many forms and faces. Genuinely bad guys and white collar corporate managers plunder accounts such as in identity fraud or mis-state corporate information in order to trick investors into buying a stock.
* Your Personal Information Is What They Seek. Fraud requires that a victim's personal information such as social security information, drivers license, passport, or financial accounts become accessible to outside 3rd party criminals.
In these cases, fraud occurs at the point of illegal entry into confidential files. The next phase of fraud requires executing the crime, which can mean plundering bank accounts, creating credit fraud by utilizing the victim's personal identifying data to open fraudulent accounts which will immediately be maximized.
* Recognizing Fraud When It Happens. How do you determine if you've become a victim of fraud? To begin with, fraud normally associates with money and categories of value.
In the case of fraud, you'll see evidence, the "smoking gun" or "fingerprint", on your bank accounts or your credit card accounts. If the event of bank fraud perpetrators have acquired your identity, then they can rapidly take over your bank deposit accounts, make withdrawals, draw down credit line facilities or more.
* Mail Box Theft. Mail fraud also occurs where criminals break-in to victim's mail boxes or even personal garbage, and then phony-up new credit accounts based on your personal information, then rapidly clean out these accounts with withdrawals or merchandise purchases.
* Insurance Policy Theft. Other more elaborate and complex scams include insurance fraud where policies can be cashed out, annuities and cash build up taken out, or the sort of fraud where the criminal induces your insurance agent to issue a loan against the policy's current value.
Institutional fraud has hit the news big time since the stock market correction of 2001. A panoply of large companies and financial institutions have either pleaded guilty or paid fines which implicitly acknowledge their recognition that securities fraud has occurred to harm investors or other market groups.
Example - Corporate Fraud In Mutual Fund Industry. Take for instance the case of mutual fund fraud in 2003 when New York Attorney General Eliot Spitzer successfully prosecuted the $21 billion Strong mutual fund group.
Asserting a clear case of fraud and violation of securities law, the attorney general uncovered records of "special arrangements" offered to certain select institutional traders which allowed those traders to rapidly trade in and out of Strong funds, at the direct cost of long term investors' interests. The stock investment fraud reached the company founder, Richard Strong, who besides owning 91% of the company had illegally obtained $600,000 in trading profits based on improper market timing privileges.
Fraud creates victims, yet fraud also causes other investors to "vote with their feet" pulling out billions of dollars from mutual funds which have behaved improperly. In related cases of alleged fraud and market manipulations, major telecom firms such as Lucent pay fines to the SEC of $25 million "neither admitting nor denying" fraud, however Lucent's market capitalization nose-dived from a high of $60 or more per share to around $3.00 per share.
* Preventing Fraud - Check Your PC And All Financial Accounts. To avoid fraud you need to be alert and diligent in monitoring your computer systems at home and work.
Since the fraud perpetrator relies on victim ignorance and carelessness (such as with identity theft carried out against naïve and unsuspecting college age youth), you can counter fraud attempts by regularly checking all financial accounts for "unusual activity" or unrecognized withdrawals.
Additionally, you can minimize fraud by regularly obtaining a credit bureau credit history report, which at least six states now require under law to be provided to their residents annually.
If you believe that you've become a victim of fraud, then you should take immediately action steps to secure computer systems, close financial accounts, carryout a document search in order to identify the nature and scale of the purported fraud.
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