Avoiding Fraud Q&A

As we live in an increasingly technologically advanced world, we must safeguard ourselves to ensure we do not become victims to scams and fraud.

Q: What is fraud?

A: “Fraud” is any activity that relies on deception in order to achieve a gain. It is when persons lie, deceive or withhold information to take your money under false pretenses.

Q: Why do people commit fraud?

A: The most widely accepted explanation for why some people commit fraud is known as the Fraud Triangle developed by Dr. Donald Cressey. 

The Fraud Triangle hypothesizes that if all three components are present — unshareable financial need, perceived opportunity and rationalization — a person is highly likely to pursue fraudulent activities. Source: Association of Fraud Examiners.

Q: What are the types of fraud?

A: There are many types of fraud such as consumer fraud, phishing schemes or ransomware. Explore more types of fraud here: FBI:Common Frauds & Scams.

Q: How does credit card fraud work?

A: The aim of credit card fraud is to purchase goods without paying, or to steal money from someone else’s credit account. There are 4 main ways this happens; 

• lost/stolen cards, 

• card skimming (copying card details with a special card reader during payment), 

• stolen card details from online databases or email/ telephone scams,

• taking a card out in someone else’s name without their permission

Q: How to prevent credit card fraud?

A: Here are some general tips to prevent fraud:

• Keep your card in a safe physical location and frequently check to ensure it remains there. 

• Only use your card at reputable merchants and pay in cash when you are unable to verify their reputability. 

• Do not give out any sensitive information, especially via email as most companies will not ask for sensitive information via email.

• Check your bank and credit card statements often and question all anomalies.

Q: What is consumer fraud?

A: Consumer fraud is commonly defined as deceptive business practices that cause consumers to suffer financial or other losses. In this type of fraud, you will likely believe you are participating in a legal and valid business transaction while actually being defrauded. Fraud against consumers is often related to false promises or inaccurate claims made to consumers, as well as practices that directly cheat consumers out of their money.

Q: What are Phishing Schemes?

A: These scams are designed to trick you into giving information to criminals that they shouldn’t have access to. You might receive an email that appears to be from a legitimate business and is asking you to update or verify your personal information by replying to the email or visiting a website. 

But once you click on that link, you’re sent to a spoofed website that might look nearly identical to the real thing—like your bank or credit card site—and asked to enter sensitive information like passwords, credit card numbers, banking PINs, etc. These fake websites are used solely to steal your information.

LibertyCCU will NEVER ask for sensitive information via email. Always be sure to double check links before clicking to make sure they are authentic.

Q: Am I in danger of being defrauded? 

A: Anyone can fall victim to fraud, especially as fraudsters get better at concealing their true intentions.

About 1 in 5 of adults (21%) across the UK and in 14 other countries around the world were defrauded between 2021 and 2023, a landmark survey finds. Source: Social Market Foundation.

This means that it is up to you to keep fraudsters and criminals at bay.

Q: What should I do if I become a victim of fraud?

A: First reach out to the institution that provides the compromised services. Let them know what form of fraud you have experienced and they will tell you the following steps you must take. 

In some cases, the police, authorities or the governing financial legislative body in your area may need to be contacted. 

While it can be relatively easy to recuperate credit card losses, for many other forms of fraud (including debit cards) the money lost may never be regained. This is why it is vital to remember that when it comes to fraud, prevention is better than cure. 

Q: How to minimize the impact of fraud?

A: Check your bank and card activity frequently. Opt for lower credit card limits to minimize impact and simply make payments (deposits) to your card account ahead of any large transactions. 

Consider removing your direct payroll deposit savings account from your debit card to safeguard against potential loss of funds. Instead, use a special savings account with a limited amount of funds to protect yourself from potential criminal activity. 

While it may be slightly inconvenient to transfer funds using your online banking as the need arises; the risk of loss can be excessive if a fraudster succeeds in getting access to your hard earned savings. 

The ability to recover funds from debit card fraud is more difficult given the options to dispute credit card frauds. While dispute resolution still works for credit cards, this should not be relied on solely, as fraudsters are increasingly finding loopholes in the card services system.

The best way to be safe is to minimize the opportunity.