Fraud vs. scams, explained

In today's digital world, scams and fraudulent activities are common. In fact, Americans lost approximately $8.8 billion to scams and fraud in 2022 — a 30% increase on total losses recorded in 2021.¹

Learn about fraud and scams in this article, including what differentiates them and potential ways to help stay protected.

What is fraud?

Fraud is typically considered to be the act of acquiring information or causing a loss through deception or other dishonest methods.² Some examples of fraud are identity theft, SIM swapping, payment card fraud, and checkout page skimming.

What is a scam and how is it different from fraud?

A scam generally aims to trick someone into providing money or personal information.³ Scammers may exploit various channels like online platforms, phone calls, or fake personas to gain a victim’s trust for their own financial or personal gain. Scams may also be referred to as social engineering.

So, what’s the actual difference between a scam and fraud? Fraud is typically a broader term that covers any intentional dishonest activity. A scam may refer to a type of fraud that can involve a deceptive scheme with the intention to exploit someone directly.

Here are some examples of common types of scams:

• Investment scams
• Dating and romance scams
• Phishing
• Messaging scams or smishing
• Charity scams
• Marketplace or reseller scams

It may be hard to tell if something is a scam. Here are a couple of the potential differences between scams and fraud:

Sharing personal information

With fraud, a criminal typically acquires someone’s personal or financial information through unauthorized access without the victim’s knowledge. Scams normally rely on victims willingly sharing their information.

This is often due to being misled by false pretenses presented by the scammer. The victim may be convinced, through deceptive information or enticing promises, to provide their personal information or participate in a transaction, believing it to be legitimate.

Return of funds

In some cases of fraud it may be easier for victims to retrieve their funds with the help of their financial institution as access to their funds happened without their permission or knowledge. Scams could potentially cause higher difficulty retrieving funds since it may appear that the victim knew they were giving away access to accounts, information, or finances.

What to do if a scam is suspected

If an individual suspects they may be a victim of a scam, some steps to consider taking are:

• Stop all communication. If it's an email, text, or phone call, don't respond to or engage with the scammer.
• If the scam involves a bank or financial account, contact the bank immediately. Request they stop any transactions.
• If any login details or PINs were shared, change them immediately. Use strong, unique passwords for each account.
• If the scam utilized false representation of a company, contact the company to alert them of the impersonation and potential fraud.
• Report the scam to the FTC.

How to help stay protected

Anyone can be affected by fraud or a scam. Here are some potential ways to help stay protected:

• Remain vigilant: Keep an eye on all transactions, especially when dealing with unfamiliar or unexpected requests.
• Regularly check financial statements: Review bank and credit card statements regularly to spot any unauthorized transactions.
• Be cautious with suspicious messages: Never click on links or download attachments from unknown or suspicious senders or sources.
• Protect personal data: Don’t share sensitive information, especially if unsolicited requests are made. Also, use secure online payment providers when completing transactions.
• Verify requests: Before providing information or making transactions, verify the legitimacy of the request through official channels or by contacting the organization directly.
• Install and update security software: Ensure devices have up-to-date antivirus and anti-malware software.
• Consider credit monitoring: Credit monitoring services may be helpful in detecting unusual activity.
• Stay informed: Keep up to date with the latest scam tactics and fraud schemes via the FTC to be better prepared to help identify and avoid potential threats.

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