“Fraud” and “scam” are two words that Americans often use interchangeably, and they’re commonly interpreted to have the same meaning. It’s understandable that the terms are regularly grouped, as criminals use both fraud and scams to steal consumers’ hard-earned money. And of course, nobody wants to fall victim to either ill-intentioned ploy.
But in the world of finance, there’s actually a substantial difference between fraud and scams. Read on to learn more about the specific meanings of fraud vs. scam — and for a roundup of resources that can help you lower your risks of being impacted by either.
What is fraud?
Fraud is commonly used as a broad term referring to deceitful activities used to trick someone into surrendering something of value. But in the financial world, it refers to acts of financial theft committed without the unsuspecting victim’s knowledge or approval.
Common examples of fraud include:
- A criminal using someone’s debit or credit card (or just the debit or credit card’s information) without their knowledge or permission
- A fraudster opening accounts in someone’s name without his or her knowledge or permission (also known as identity theft)
- A perpetrator gaining access to someone’s bank account and using it to send a payment or make a withdrawal without the account holder’s knowledge or approval
Because fraud, by definition, occurs without the victim’s knowledge, it can be harder for consumers to protect themselves against than scams. But by regularly keeping an eye out for suspicious activities and transactions within your financial accounts, you can spot, report and address fraudulent activities more quickly, limiting the damage they can inflict.
What is a scam?
As with fraud, criminals employ scams in an effort to take something of value from a consumer. But one key factor makes a scam different from fraud: with a scam, the victim is aware and involved, actually providing authorization for a payment or other financial transaction to go through, or willingly surrendering his or her personal or financial information to the criminal. Scams often see the victim tricked into authorizing or making payment for a product or service that is never actually rendered, or is provided but is not the same as what was advertised, described or promised. They can also involve the victim willingly sharing his or her personal or financial details.
Some of the different types of scams include:
- Criminals pretending to be debt collectors or honest providers of products or services and persuading the victim to send payment
- Ill-intentioned actors pitching and taking payment for fake investment schemes, or offering fake prize or lottery winnings in exchange for payment or personal/financial information
- A perpetrator pretending to be a representative of a bank or other financial institution and requesting/receiving personal or financial details from the victim
Criminals can execute scams in various ways, including in person and via phone, text or email communications.
Think you might be a victim? Here’s what to do
If you think you may have been targeted and/or victimized by fraud or scam, consider taking these steps to minimize the impacts and to help prevent future incidents:
- Immediately cease any communications with a suspected scammer. Don’t respond to any additional messages from or otherwise further engage directly with the individual.
- If you suspect your account information has been compromised, immediately contact the applicable bank, credit card company or other financial institution to report the incident and get guidance on next steps. This could involve stopping payment on a check or charge, changing your credit card number or freezing further activities on your account.
- If you think your login information or PIN number may have been compromised, immediately change your password or PIN number — and be sure to use strong and unique passwords.
- If a scam attempt involves the criminal impersonating a legitimate business or organization, let the entity being falsely represented know right away. In many cases, if the misrepresentation was made via email (phishing) or text (smishing), you can report the incident by simply forwarding the fake message you received to an email address or text account set up specifically for the purpose of reporting phishing and smishing — which can be often found via a quick web search. For example, phishing emails that attempt to look like they’re coming from online retail giant Amazon can be forwarded to reportascam@amazon.com, and phishing emails mimicking credit card company Visa can be forwarded to phishing@visa.com.
- Report any suspected scam or fraud attempts to the FTC, FBI or other appropriate authorities.
More resources for reducing your fraud and scam risks
The Arthur State Bank blog features a wealth of articles focused on ways to protect yourself against various types of fraud and scams. Read the following blog posts to learn more:
- 7 Simple and Effective Ways to Protect Yourself From Cybercrime
- 9 Tips, Tricks and Tools for Safer Online Banking
- 8 Ways to Protect Yourself Against ID Theft
- Step Up the Safety of Your Credit Cards With These 9 Security-Focused Tips
- 7 Steps to Better Secure Your Smartphone
- 3 Common Ways Criminals Steal Your Identity — and How to Avoid Them
- Step Up Your Digital-Banking Security With These 7 Tips
- Protect Yourself From Phishing Scams With These 8 Effective Tactics
- Dos and Don’ts of Mobile Banking Apps — Keep Your Data Secure
Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, other personal loans and more, visit arthurstatebank.com.
