Fraud is a form of deception used for the purpose of securing some sort of benefit. This benefit is typically financial, but there are other situations in which fraud is used for something that is not necessarily related to monetary gain. The misrepresentations of the perpetrator often lead to a loss for the victim or victims, and the scale on which fraud is committed varies widely and may encompass a great deal of people, organizations or governments. While fraud is considered both a civil offense and a criminal offense, it is also said to be underreported and can be difficult to prove in both civil and criminal matters.
Common Forms of Fraud
The most commonly known forms of fraud are insurance fraud and bank fraud, both of which are essentially considered acts of theft utilizing deception. In the case of insurance fraud, a claimant may make false or exaggerated claims to collect on an insurance policy. There are also many instances in which an individual will secure an insurance policy with the specific intention of defrauding the insurance company by engaging in some deceptive practice, such as committing an act of arson on a building that is insured for a significant amount and then claiming the fire as accidental in order to collect on the policy. Attempting to secure a profit through these methods is considered fraud and may result in civil and criminal charges.
Protecting Against Fraudulent Practices
It is difficult to identify fraudulent activity due to the simple fact that it is an intentional act of deception. There are, however, some methods for recognizing fraudulent behavior before it leads to some sort of significant loss. Insurance companies use investigative practices to ensure that its policyholders are not attempting — or have not attempted — to defraud the company, and banks have systems in place for detecting fraudulent behavior.
The task of identifying this type of activity is somewhat difficult for individuals, as most people are generally trustworthy of others. Individuals who are able to recognize instances in which fraudulent behavior may be possible know to exercise great caution in these situations, and when something appears “too good to be true,” it is necessary to be exceptionally thorough to ensure there is no chance of being defrauded in the process. While there are steps for recovering financial losses due to fraud, the process can be lengthy and there is never any guarantee that those losses will ever be returned. It is therefore best for preventive measures to be adopted for the avoidance of fraudulent behavior.