How to recognise signs of a Fraud or a Scam

Invoice and Mandate Scam

Definition: Invoice and mandate scams involve deceiving individuals or businesses into making payments based on fake requests. In an invoice scam, criminals send fraudulent invoices that look legitimate for goods or services that were never provided. Mandate scams, on the other hand, involve altering documents to change the bank account information for recurring payments, diverting funds to the scammers.

• Invoice Scam: Scammers produce invoices that closely resemble real ones, complete with official logos and formatting. Unsuspecting recipients may pay these invoices, thinking they are valid.
• Mandate Scam: Scammers impersonate a legitimate company or service provider, using forged documents to change payment details, which ensures that future payments go to the scammers instead of the intended recipient

CEO Fraud

Definition: CEO fraud is a form of business email scam where a fraudster pretends to be a company’s CEO or another top executive to deceive employees into sending money or disclosing sensitive information. The scammer usually sends an email that looks authentic, often claiming there’s an urgent need for a financial transaction or confidential details. This type of fraud takes advantage of the trust and authority that come with the CEO’s role, making it especially risky for businesses.

• The scammer creates an email that closely resembles the CEO’s writing style and email address, making it seem genuine. The email typically emphasises urgency, pushing the recipient to quickly authorise a financial transaction or share confidential information without taking time to confirm the request.

Impersonation Scam

Definition: An impersonation scam is a fraudulent scheme in which a scammer acts as someone else—like a trusted person or organisation—to trick victims into sharing personal information, money, or account access. This can happen through phone calls, emails, or social media, where the scammer adopts the identity of a real individual or entity to earn the victim’s trust. Common instances include pretending to be government officials, tech support, or even friends and family asking for help.

• Email Phishing: Scammers send emails that seem to come from well-known organisations, such as banks, social media sites, or government agencies. These emails often contain a link leading to a fake website that tricks the recipient into revealing personal details, login information, or making a financial transaction.
• Spear Phishing: This is a more focused type of phishing where the fraudster tailors the email to make it look like it’s from someone the victim knows, such as a coworker, friend, or manager. It’s commonly used in business settings to steal confidential data or trigger unauthorised payments.
• Caller ID Spoofing: Scammers alter the caller ID to make it look like the call is coming from a trusted source, such as a bank, law enforcement, or a reputable company. This tactic makes the call seem more believable, increasing the chances that the victim will trust the caller and provide sensitive information or send money.
• Friend or Family Emergency Scam: Scammers pretend to be a relative or friend in distress, often claiming to be in trouble while traveling. They reach out through phone calls, emails, or social media, asking the victim for money to help with an urgent situation like bail, medical expenses, or being stranded.

Investment Scam

Definition: These scams use dishonest practices to lure in investors by making false promises or providing misleading information, ultimately leading to financial loss.

• Ponzi Schemes: In a Ponzi scheme, fraudsters lure investors with promises of high returns. Instead of generating profits through legitimate business activities, they use funds from newer investors to pay earlier ones. The scam works as long as new investments keep coming in, but once they stop, the scheme collapses, leaving most investors with losses. A well-known example is Bernie Madoff’s Ponzi scheme.
• Pyramid Schemes: Like Ponzi schemes, pyramid schemes rely on recruiting new participants. However, in a pyramid scheme, participants must recruit others to earn money. The system falls apart when there are no new recruits, leaving many participants without returns. Some companies disguise pyramid schemes by pretending to sell products or services but mainly profit from recruiting new members.
• Boiler Room Scams: Boiler room scams involve aggressive sales tactics, typically from call centres, to pressure people into investing in worthless or fake stocks. These investments often involve offshore companies with little to no regulation. For instance, a broker might contact you with a supposedly lucrative stock tip, urging you to act quickly to secure high returns.

Purchase Scam

Definition: A purchase scam is a fraudulent scheme where a scammer tricks someone into paying for goods or services that are fake or misrepresented. This often occurs through fake websites, misleading ads, or impersonating legitimate businesses. Victims pay upfront but receive nothing, leading to financial losses. Common examples include online auction fraud, fake rentals, and counterfeit products.

• Counterfeit Websites: Scammers set up fake websites that closely resemble real online retailers to trick victims into making purchases.
• Deceptive Advertisements: Scammers advertise products on social media, online marketplaces, or through search engine ads at prices that seem too good to be true.
• Auction Scams: Fraudsters list non-existent items on auction platforms, take payments, and then disappear without delivering anything.
• Fake Rental Listings: Scammers create listings for rental properties that either do not exist or are not actually for rent, taking deposits from unsuspecting renters.
• Counterfeit Goods: Scammers offer fake or inferior products, presenting them as authentic, which usually results in low quality or non-delivery.

Romance Scams

Scammers create fake profiles on dating sites or social media to form emotional connections with victims. Using stolen images and fabricated stories, they manipulate individuals into providing financial assistance once they’ve gained their trust, often exploiting feelings of loneliness.

1. Creation of Fake Profiles: Scammers set up profiles on dating websites or social media using stolen images and made-up details to seem appealing and trustworthy.
2. Establishing Trust: They take time to cultivate a relationship, often expressing strong emotions early on to create a feeling of closeness. This may involve regular messaging, video chats (sometimes with stolen footage), and sending gifts.
3. Emotional Manipulation: Scammers frequently exploit the victim’s emotions by claiming to be in tough situations, like health problems, financial struggles, or family emergencies, that require immediate financial help.
4. Money Requests: Once trust is built, scammers generally ask for money, citing various reasons such as travel costs to meet the victim, medical expenses, or other urgent needs.
5. Avoiding In-Person Meetings: They often come up with excuses to dodge face-to-face meetings, such as being stationed in the military, working abroad, or having travel complications.
6. Pressure Tactics: Scammers may apply high-pressure techniques, urging victims to send money quickly under the pretence of urgency. They might even threaten to end the relationship if the victim refuses.
7. Leveraging Technology: Many scammers utilise technology to support their schemes, including fake social media profiles, manipulated video calls, and sometimes hacking into the victim’s accounts to gather more personal information.
8. Creating Urgency: Scammers often create a sense of urgency, pushing victims to act hastily without thinking, which reduces the likelihood of them verifying the situation.

Advance Fee Scams

Definition: This type of scam requires individuals to pay money upfront, with the promise of receiving a service or benefit later. The scammer demands payment before delivering what was promised, leaving the victim at a loss.

• Lottery or Prize Scams: Individuals are contacted with news that they have won a lottery or prize, but they are required to pay a fee before they can collect their winnings.
• Inheritance Scams: Fraudsters impersonate a lawyer or executor, informing the victim that they are entitled to a substantial inheritance. However, the victim is told they must first pay legal fees or taxes.
• Job Offer Scams: Individuals are presented with job offers that require them to pay upfront for things like training, uniforms, or background checks before they can officially begin their employment.
• Loan Scams: People looking for loans often encounter scammers who lure them in with promises of quick and easy approval. However, to proceed, the victims are asked to pay an advance fees.

Next: 2. Methods that fraudsters use to obtain your money