Financial Fraud Schemes Targeting Consumers & Small Businesses

Today, there is no shortage of financial scams. From traditional schemes to the exploitation of new technologies, consumers and business owners have to stay vigilant.

If you fall victim to fraud, you could lose more than your hard-earned savings. In many cases, criminals have access to your banking information and key personal details, which opens the door to identity theft. To keep your credit score and life intact, learn how scammers may attempt to trick you or your employees. 

Advanced Fee Scams

Advanced fee fraud can range from lottery scam emails to fake work-from-home job offers. Typically, they start with a promise to make you money or eliminate debt. In order to claim a prize or start a new job, you’re asked to pay upfront for taxes or equipment but nothing ever arrives. If you did the transaction online, someone may have your banking information. 

Mortgage Fraud

Individuals concerned about losing their home or having an upside down mortgage may fall victim to scams promising they can keep their house. The perpetrator may be a corrupt real estate agent or entity advertising loan modification services.

In these scenarios, the fraudster waits for distressed homeowners to respond to their fake advertisement. As the scam unfolds, the victim pays a large sum of money to keep their house, have their mortgage modified or starts making payments to an outside entity. In the meantime, the homeowner continues to receive foreclosure notices in the mail or their monthly payment remains the same. 

Banking Fraud

In recent years, banking fraud has surged due to the availability of online and mobile services. Common schemes include:

  • Unauthorized banks setting up accounts for individuals to steal their funds.
  • Advisor fraud, which involves an individual impersonating a financial advisor to obtain account and personal information from victims. These scams may be angled toward retirement planning or younger people interested in growing their investments.
  • High-yield investment fraud, which involves trading and promising a high return. Victims are often sent to a fake dashboard illustrating how their money is performing and are convinced to deposit more funds. Meanwhile, the scammer makes off with thousands of dollars in cash.
  • An older financial ruse, cashier’s check fraud often overlaps with advanced fee scams. The victim is told by the scammer to send a cashier’s check – which is more difficult to trace than a standard bank check – to claim their prize, help someone in a difficult situation or pay for equipment to start a work-from-home job.
  • Person-to-person scams involving Zelle, Cash App or Venmo. Victims are tricked or have their phone hacked to authorize a transaction, which can move thousands of dollars from their account into the scammer’s account. Because the bank claims the customer approved the transactions, victims often have minimal recourse unless they get law enforcement involved or pursue legal action.

Identity Theft

It’s estimated that as many as 9 million Americans fall victim to identity theft schemes each year. Through multiple mediums, criminals attempt to obtain your name, Social Security number and credit card or bank account number to impersonate you and open accounts in your name. The internet and phone scams may be used to extract these key details.

Along with opening accounts or taking out loans using your personal details, the criminal may use this information to obtain medical care with your insurance or file taxes in your name. Common signs of identity theft, which may coincide with a data breach or website you frequently visit, include:

  • Changes in your credit report or history
  • You stop receiving important financial statements
  • Unexplained withdrawals from your bank account or credit card charges
  • You receive a notice from the IRS about multiple tax returns filed in your name


Phishing is often the gateway to identity theft. You may be sent an email, receive a phone call or text message or get a pop-up on the computer asking for your personal information. Today, phishing schemes involve a service asking you to review or update account details or claiming to notice suspicious activity. If you click on the provided link, you’re taken to a URL the scammer has set up to obtain your account and personal details.


These schemes often involve someone in a position of power or authority who has access to a client’s funds. They will divert or utilize these funds for personal use, including sending money to their own account, skimming part of a refund or return, purchasing property or making personal purchases but writing them off as business expenses.

Tax Fraud

Similar to embezzlement, the individual perpetrating this crime often has a position with financial responsibility. Tax fraud starts out by falsifying the information on a return in order to obtain a higher refund. For instance, adding extra deductions, claiming personal expenses for business purposes or omitting a source of income.

Tax fraud increasingly overlaps with identity theft; a criminal steals your personal information to file taxes in your name and claim a refund.

Credit Card Fraud

A criminal manages to obtain your name and credit card details through a website data breach, by monitoring your online activity with malware or skimming your information from an ATM or gas station.

To ensure their activity goes undetected, the fraudster may do a series of small transactions using your credit card. As such, you’re advised to regularly check all charges on your account and look for amounts or locations you don’t recognize.

Cryptocurrency Fraud

Cryptocurrency markets remain largely unregulated, which has opened the door to fraud, including demanding this form of payment or using it to fuel investment scams.

In one recent incident, U.S. law enforcement arrested a couple following their wedding in connection with a 2016 Bitfinex hack, in which they made off with $3.6 billion in cryptocurrency as part of a complex money laundering scheme. It started with digital wallets and exchanged Bitcoin currency for a privacy coin to conceal the source of the funds.

Insurance Fraud

Insurance fraud is another complex crime that’s committed in a number of ways:

  • A claimant files a false insurance claim to obtain a payment from their carrier.
  • A group of individuals, including or targeting a claimant, may stage an accident to receive an insurance payout.
  • Unauthorized insurance agents or unlicensed carriers may promise lower premiums, only to take money from customers and provide no coverage.
  • Medical offices or professionals may intentionally file inaccurate claims to receive higher reimbursement funds.
  • Customers may falsify their medical or financial history to receive lower premiums.

Fake Charities

These fraudulent organizations often pop up following a disaster and make contact over the phone, computer or in-person. They may only accept payments via cash, wire transfers, payment-to-payment apps or gift cards and use high-pressure tactics to get you to send money. Their names sound familiar to legitimate organizations to throw off suspicion.

As one example, a Minnesota nonprofit named Feeding Our Future orchestrated a $250 million COVID-19 relief fund scheme intended to take money from the USDA Child Nutrition Program. The organization recruited individuals to open Child Nutrition Program sites around the state, all claiming to feed local children and set up shell companies that also enrolled in the program. Reimbursement funds to the shell companies were then laundered.

In the process, those involved falsified documentation regarding the number of people in attendance and meals served at each location. The Department of Justice arrested 47 individuals in connection with the crime toward the end of 2022.

Debt Collection Fraud

Debt collection fraud intentionally creates a sense of urgency. A familiar organization like the IRS or a well-known bank supposedly claims you have unpaid funds and could face wage garnishment or home foreclosure if not paid. In extreme cases, you may be threatened with jail time. Scammers have two goals here: To get you to pay what you allegedly owe or obtain your personal details to commit identity theft.

Are you concerned that financial fraud may be affecting your personal insurance or business policies? To discuss your options with an agent at HUB/Ion Insurance, contact us today.