Financial Fraud - Victim Connect Resource Center (2024)

Financial fraud happens when someone deprives you of your money, capital, or otherwise harms your financial health through deceptive, misleading, or other illegal practices. This can be done through a variety of methods such as identity theft or investment fraud.

For all types of financial fraud, it is important to report the crimes to the appropriate agencies and law enforcement as soon as possible. Fraudulent charges should also be disputed or canceled as soon as they are discovered. Furthermore, victims should gather all documentation related to the crime (e.g. bank statements, credit reports, tax forms from current and previous years) and continue to file important information throughout the reporting process.

Unfortunately most victim compensation programs do not cover money lost to fraud or fraudulent schemes. Check your specific state laws regarding victim compensation to make sure. Civil justice may be the only legal option to recover lost money.

Common Types of Financial Crimes

For a detailed overview of common financial crimes and action steps for reporting please see our Taking Action guide to financial crimes.

Identity theft:

Someone steals your personal financial information (e.g. credit card number, social security number, bank account number) to make fraudulent charges or withdrawals from your accounts. Sometimes people will use the information to open credit or bank accounts and leave the victim liable for all the charges.

Identity theft often results in damaged credit rating, bounced checks/denied payments, and being pursued by collections agencies.

Examples:

• Unfamiliar charges or purchases on your credit card or bank account statements.
• Perpetrators posing as a bank, government office, or official institution in order to steal your personal financial information

Investment Fraud:

Selling investments or securities with false, misleading, or fraudulent information. This may be false/grandiose promises, hiding/omitting key facts, and insider trading tips among other things.

Examples:

• Ponzi schemes: Investment fraud scheme where returns are paid to investors using new capital from newly recruited investors as opposed to interest and profits from legitimate investments.
• Pump & Dump schemes: Stock traders or stock brokers purchase a stock at a low value then entice other clients to buy the same stock in order to inflate its price. Those who bought the stock at its low value then sell their shares and pocket the profit.
• Selling a business or real estate opportunity investment with bad, inaccurate, or false information. Also includes omitting or hiding information that is important to an investment decision.

Mortgage and Lending Fraud:

Someone else (often a friend or family member) opens a mortgage or loan using your information or using false information or lenders selling you mortgage or loans with inaccurate information, deceptive practices, and other high-pressure sales tactics.

Examples:

• Mortgage and loan modification services
• Predatory lending practices such as:
  • Unjustifiedrisk-based pricing
  • Single-premiumcredit insurance
  • Failure to present the loan price as negotiable
  • Failure to clearly and accurately disclose terms and conditions
  • Short-term loans with disproportionately high fees
  • “Bait and switch” contract negotiations
  • Servicing agentandsecuritizationabuses

Mass Marketing Fraud:

Often committed using mass mailings, telephone calls, or spam emails. Mass marketing fraud typically involves fake checks, charities, sweepstakes, lotteries, and exclusive club or honor society invitations. These offers and letters are used to steal your personal financial information or solicit contributions and fees to fraudulent organizations.

Examples:

• Fake charity donation solicitations
• Exclusive Club or Honor Society invites. Usually, invitations are sent through mail or emailed and promise membership in a particular organization for a small fee or setting up a recurring charge with no discernable service provided. Also used to steal personal financial information.
• Award or Prize notifications. Also seen on the internet as “10,000th Visitor” type notifications. Usually, ask for personal financial information or fee to be paid in order for a prize to be delivered or award to be made official. If you do not remember applying or entering a competition for the award or prize it is probably fraudulent.
• Phone calls claiming to be from the government, your bank, or other “official” agency

How to Report Financial Fraud

For all types of financial crime you should contact at least the following agencies:

• Local police or law enforcement to report the crime and obtain a police report
• Your bank(s) to report the crime and explore any possible resources the bank has available
• Local District Attorney
• You can reach out to a national hotline for more assistance reporting including VictimConnect Resource Center (855-484-2846), U.S. Senate’s Committee on Aging Fraud Hotline (855-303-9470), Securities Helpline for Seniors (844-574-3577), and Identity Theft Resource Center (888-400-5530).

For support reporting specific types of fraud please contact VictimConnect Resource Center or report to the following organizations:

• Medical and Identity Theft – Health and Human Services
• Social Security Identity Theft/Fraud – Office of the Inspector General – Fraud Hotline: 800-269-0271
• Tax Identity Theft – IRS Identity Protection Specialized Unit – Contact IRS: 800-908-4490
• Fraud by Broker or Investment Firm – Financial Industry Regulatory Authority (FINRA) – Securities Helpline: 844-574-3577
• Futures Fraud – National Futures Association – Information Center: 800-621-3570
• Securities/Investment Fraud – Securities and Exchange Commission (SEC) – SEC Phone: 800-732-0330
• Lending Fraud – Federal Trade Commission (FTC) – FTC’s Consumer Response Center: 877-382-4357.
• Internet Based Fraud – Internet Crime Complaint Center (IC3)
• Internationally Based Fraud – U.S. Department of State – Overseas Citizens Services: 888-407-4747
• Consumer Scams – Better Business Bureau

Learn More

To learn more about scams related to COVID-19, visit the FTC’s Coronavirus Advice for Consumers

For more detailed information and helpful resources regarding financial crime, visit our Financial Crimes Resource page and read Taking Action: An Advocate’s Guide to Assisting Victims of Financial Fraud

Visit ourVictimConnect Resource Mapfor additional resources or contact the VictimConnect Resource Center by phone or text at1-855-4-VICTIMor bychatfor more information or assistance in locating services that can help you or a loved one experiencing domestic violence.