Fraud Offenses
- Credit Card Fraud:
The actual credit card may be stolen, or the data on the account may be compromised, including the card account number and other information that may be required for a legitimate transaction. The compromise can occur by many common routes, and can usually be conducted without tipping off the card holder, the merchant or the card issuer, at least the account is ultimately used for fraud. A compromised account can be hoarded by a thief for weeks or months before any fradulent use.
Credit card fraud is often associated and included to a stolen identity, and identity fraud.
- Insurance Fraud:
- Soft fraud: also known as opportunistic fraud, soft fraud consists of policyholders exaggerating otherwise legitimate claims. Soft fraud can also occur when, while obtaining a new policy, an individual misreports previous or existing conditions in order to obtain a lower premium.
- Hard fraud: deliberatly plans or invents a loss (ie: collision, auto theft, or fire that is covered by insurance policy in order to receive payment for damages.)
- Mortgage Fraud:
There are two types of mortgage fraud: fraud for property/housing and fraud for profit.
- Fraud for Property: The borrower usually is the perpetrator on a single lown. The borrower makes a few misrepresentations, usually regarding income, personal debt, and propertly value, or there are down payment problems. The borrower wants the property and intends to repay the loan.
- Fraud for Profit: generally, multiple gross misrepresentations of loan transactions with several financial institutions involved. These representations are: income, assets, collateral, length of employment is overstated; or fictitious employment is reported, sometimes backed by co-conspirators. Often the credit history is altered so the debts are not fully disclosed. Appraisals almost always list the property as owner-occupied, and down payments do not exist or are borrowed and then disguised with a fraudulent gift letter. The faulty appraisal is then inflated to increase the sales value to make up for no down payment, and to generate cash proceeds in fraud for profit.
Property Flipping - Property is purchased, falsely appraised at a higher value, and then quickly sold. The appraisal information is fraudulent: a home worth $20,000 may be appraised for $80,000 or higher in this type of scheme.
Air Loans - This is a non-existent property loan where there is usually no collateral.
Equity Skimming - An investor may use false credit reports and income documents, and a straw buyer to obtain a mortgage loan in the straw buyer's name. The straw buyer signs the property over to the investor close to closing in a quit-claim deed which relinquishes all property rights and provides no title guarantee. The investor does not make any mortgage payments and rents the property until foreclosure takes place, usually several months later.
Fictitious/Stolen Identity - A fictitious/stolen identity may be used on the loan application.
Foreclosure Schemes - Homeowners who are at risk of defaulting on loans or whose houses are in foreclosure are targeted, where the homeowners are mislead into believing they can save their homes in exchange of a deed transfer and up-front fees. The scammer remortgages the property or pocketing fees paid by the homeowner.
Inflated Appraisals - An appraiser acts with a borrower and provides a misleading appraisal report to the lender, stating an inflated property value.
Nominee Loans/Straw Buyers - The borrower's identity is concealed through the use of a nominee who allows the borrower to use the nominee's name and credit history to apply for a loan.
Silent Second - The buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The second mortgage typically is not recorded to further conceal its status from the primary lender.
- Organized Fraud:
Also known as a white-collar fraud, organized fraud is a criminal act of fraud when committed by an organized group of people, implementing a variety of scams together to commit organized fraud and to illegally obtain money from unknowing third parties.
False statements, fraudulent medical claims, and burning to defraud an insurer are examples of insurance fraud. It is any act committed with intent to fraudulently obtain payment from an insurer. There are two types of insurance fraud: hard fraud and soft fraud.