Fraud Victim Advice / Assistance for Consumer Scams and Investment Frauds
Ethical views reflect beliefs about right and wrong and define broad standards of behavior which help shape the rules we use to live together in society. Fairness and freedom are two ethical views that are violated by fraud in an environment of dishonesty, greed and laziness,
Fraud deceives a person by unfairly misrepresenting truth. It also restricts the freedom of its victims as it robs them of their money.
Fraud Victim Demographics
Just as there is no typical profile for swindlers, neither is there one for their victims. Virtually anyone can fall prey to fraudulent crimes.
Movie actors and athletes, professional persons and successful business executives, political leaders and internationally famous economists have all fallen victim to investment fraud.
Certainly victims of high-yield investment frauds may possess a level of greed which exceeds their caution as well as a willingness to believe what they want to believe. However, not all fraud victims are greedy, risk-taking, self-deceptive individuals looking to make a quick dollar. Nor are all fraud victims naive, uneducated, or elderly.
Victims of fraud come from a variety of racial, age, gender, religious, socioeconomic, and educational backgrounds. And smart perpetrators prey on those differences.
Some swindlers deliberately seek out families that may have limited means or financial difficulties, figuring such persons may be particularly receptive to a proposal that offers fast and large profits. A favorite pitch is that small investors can become rich if they learn and employ the investment strategies used by wealthy persons.
Young, well-educated people are the most likely to fall for swindles overall but older people are more likely to report these economic crimes. Senior citizens often fall prey to telemarketing frauds, but people in their 30s and 40s complain most often that they have been defrauded over the Internet, according to the National Consumers League.
For example, fraudulent telemarketers often target the elderly as potential victims, not because they are greedy, but because they are more likely to:
|have money, property, savings, and investments;|
|be home to receive phone solicitations; and|
|remain on the phone longer to hear fraudulent sales pitches (due to loneliness).|
Younger, educated adults may be targeted because of a:
|lack of maturity and experience that would help them recognize fraudulent pitches,|
|desire and social pressure to increase their standard of living quickly, and|
|lack of information about financial investments.|
Other victims are targeted because of certain personality or character traits that may increase their risk for fraud victimization. These include
|respect for authority figures, and|
Financial Effect of Fraud
Of successful fraud attempts, respondents to a study conducted by the National Institute of Justice indicated that of those respondents who fell prey to a fraud scheme, 85 percent lost money or property; 20 percent suffered financial or personal credit problems; 14 percent suffered health or emotional problems directly related to their victimization; and 14 percent of fraud victims lost time from work.
Younger people who are ripped off by swindlers are fortunate to the extent that they have the opportunity to pick themselves up and restore some or all of their losses through new earnings. If you are elderly, disabled, or on a fixed income and you lack opportunities to recover your losses you may face additional trauma.
In some instances, an elderly or disabled victim's very independence is jeopardized, particularly if family members react to the loss by having the victim declared legally incompetent to handle his or her own financial affairs.
Psychological Effects of Fraud
Fraud crime is a personal violation. Although there is no serious physical injury many victims of con-men speak of the betrayal as the psychological equivalent of rape. Some victims find it helpful to seek the services of a counseling professional, clergy member, or advocacy organization, but most suffer alone.
Your trust in your own judgment, and your trust in others, is often shattered. You may have hesitated to tell family members, friends, or colleagues about your victimization for fear of criticism. Family members and business associates may even have been financially exploited at your urging, resulting in increased feelings of guilt and blame.
The dread becomes immeasurable, unrelated to specifics, just an all encompassing blanket of depression.
Fraud often evokes the following feelings or emotional reactions among its victims:
|self-doubt, shock, disbelief|
|societal condemnation and indifference (the attitude that victims of fraud deserve what they get as a result of their own greed and stupidity)|
|isolation (when victims suffer their losses in silence rather than risking alienation and blame from family members, friends, and colleagues)|
|anger, resentment, and a sense of betrayal toward the offender for taking advantage of you especially if they are someone you know|
|frustration with criminal justice professionals|
|shame, embarrassment, and guilt if you feel you contributed to your own or others' victimization|
|fear for your financial security|
|increased concern about your personal safety and well-being or that of your family.|
The tangible cost of fraud crime is easily translated into dollar amounts. Less easily measured, and perhaps the most exacting cost of all, is the severe emotional impact of fraud crime on many of its victims. Such emotional harm can be caused by the victim's loss of the following:
|retirement savings or children's educational funds|
|professional or personal credibility|
Although victim service providers and mental health practitioners have focused on the devastating effects of violent crime.
Some of the same physiological and long-term emotional effects experienced by victims of violent crimes are also experienced by fraud victims such as:
|feeling of terror or helplessness|
|rapid heart rate|
|inability to eat or sleep|
|loss of enjoyment of daily activities|
Short-term effects on victims include:
|preoccupation with the crime (thinking about it a great deal, talking about it constantly, replaying the crime, wondering what they could have done differently, etc.)|
|inability to concentrate or perform simple mental tasks|
|concern that other people will blame them for what has happened|
|increased strain on personal relationships (even to the extent of divorce or withdrawal of support)|
In the extreme, fraud crimes have led some victims to attempt or succeed in committing suicide.
Why are fraud crimes under-reported?
Groups and government agencies that help crime victims say they have been slow to respond in part because the victims themselves are often too embarrassed to come forward. Many victims feel they have only themselves to blame when, in reality it is the calculating, skilled perpetrators are to blame for these criminal acts.
Although fraud victims are not alone, they often suffer their losses alone and in silence. Shame, guilt, embarrassment, and disbelief are among the reasons that only an estimated 15% of the nation's fraud victims report their crimes to law enforcement.
Some victims experience such high degrees of shame, or fear about the loss of personal and professional respect and credibility, that they choose not to disclose their victimization to family members, friends, or professional colleagues.
Some feel their losses are not large enough to report, do not want to get involved, think law enforcement agencies will not take the crime seriously, or think nothing will result from reporting the crime. Sadly, they are often right.
You may also fear confronting the person who defrauded you; other peoples' judgmental attitudes and actions; and public disclosure, especially if you have not told anyone close to you about the crime.
Fraud Victims Manual ( pdf )
ScamVictimsUnited - Forum and info site by victims - mostly online auction scam victims.
Risk Management – September 30, 2002
Low Priority Given to a Potentially High Risk
With the threat of cyber-terrorism and massive corporate accounting fraud in the limelight, the already-minimized issue of external fraud will most likely take a backseat to these far more pressing, real or perceived, concerns.
Backed by the medias demonizing of such threats, internal auditors and IT security practitioners may be able to acquire or maintain staffing and budgets to deal with these issues, but they should not dismiss the likelihood of a more benign, but potentially just as damaging, intrusion by someone contemplating fraud.
Until one is actually victimized the perceived and anticipated risk that a threat will occur tends to be the basis for preventing it. Sadly, the impact of fraud has been historically underestimated.
For while corporations can have you lock the cyber-doors to deter or prevent electronic intruders, you have still failed as a security resource if your client’s staff willingly opens them up and welcomes someone inside whom they mistakenly trust.
Social engineering is not limited to the hacking community. Fraudsters have long been talking the birds out of trees, scamming individuals. All of the monetary benefits achieved from identity theft, cramming of unauthorized charges and investment fraud can, and have been, easily transferred over from the individual consumer to a corporate level.
Scammers are becoming more adept at using technology to bolster their imaginary corporate image and their arsenal of weapons. They routinely troll Web sites data-mining for e-mail addresses and contact names of leads so that they can sound as if they know the victim in their initial approach. Their own Web sites, which they proudly display as confirmation of their respectability, can rival those of legitimate companies in design and function.
Criminals in Suits
Both internal auditors and IT professionals would be wise to expand their knowledge bases and adjust their risk assessments of what they might have historically deemed consumer crime because these “criminals in suits” have no more trouble targeting the individual in control of the corporate purse strings with a prime bank scheme than they would an unsophisticated investor.
There appears to be a distinct separation between information and victim support structures for corporate and consumer fraud.
While corporate fraud events and associations are plentiful, the area of consumer fraud is delegated almost exclusively to the realm of government, leaving no support for privately run organizations promoting fraud awareness.
Directly affected parties such as banks, credit card companies, and telephone giants may, out of good corporate citizenship — or concern for mounting losses — support public awareness initiatives, but the efforts are sporadic and generally received with indifference from an ungrateful or indifferent public.
False Assumptions About Fraud
Any fraud prevention program is hampered by the universal belief that we are all too perceptive and cautious to ever be deceived by a con artist.
This perception is the starting point in a whole string of related assumptions that allow criminals to defraud both individuals and organizations with virtual impunity.
Con men are recognizable. — Even ignoring the role of women in this huge industry, telemarketing and Internet based fraud operations are not manned exclusively by slick sounding buffoons. The only difference between a legitimate sales offer and a scam is the unseen intent of the promoter. If we all had telepathic powers we would be immune to deception. Since we don’t, we are all at risk.
Victims deserve their fate. — Nowhere does Darwin’s Theory more harshly prevail than in society’s deep-rooted disdain for fraud victims. With the exception of sympathy for the elderly, we collectively brand fraud victims as deserving of their fate. Gullibility and greed are branded over the already present scars of guilt and shame.
Others should naturally share these views. — You may consider it insulting to even provide warnings of specific scams that may affect your staff, certain that the inherent obviousness of the scheme would easily be recognized and avoided.
With consumer scams accounting for $45 billion a year in losses it might still be worth pointing out the obvious along with details of the techniques used and the potential severity..
Our corporation won’t fall for a consumer scam. — Forgetting that the corporate organization consists of individual consumers, each one prone to a successful attack, is both vain and dangerous.
We trust our staff. — The path from honest employee to embezzler may never have been taken intentionally without a deceptive and unexpected influence.
Consumer fraud is an external threat. — Once an internal employee has been compromised, the fraudster has a direct conduit to a company’s infrastructure. All external source fraud prevention measures have been bypassed.
Financial losses appear to be small in nature. — While many institutional or business-focused frauds, such as the fax paper and printer toner telemarketers in office supply scams, seek only small amounts per hit, these can easily add up through prolonged repetition. Even then, they pale in comparison to losing trust in, or having to terminate a formerly valued employee who has been tainted by a deception.
Controls will keep external losses small. — Most people don’t realize that the average victim loss in a Nigerian e-mail scam is more than $10,000.
While you may find even this unimaginable, consider that losses have exceeded $1 million dollars in several cases and that many of these major losses been from individuals holding high levels of responsibility who “borrowed” the money from their company or clients to make payments to the scammers.
Laws are available to prevent such occurrences. — The fact is that laws are made for those who will obey them. Criminal fraud operations masquerade as respectable corporate entities and either stretch the limit of consumer laws or ignore them entirely, content to pay whatever financial penalties they are ordered to pay as a cost of doing business.
The police will rush to act on the matter. — Matching budgetary constraints against levels of enforcement means that even the authorities must allocate resources where they are deemed most necessary.
Do not expect your local police to mount a cross-country manhunt for a white-collar criminal. It is now commonplace for the police to require businesses to fund a private investigation, and present them with the evidence before they will file criminal charges.
Criminals are adequately punished. — Historically, white-collar criminals have received very light sentences at minimum security institutions. While the lengthy prison sentences for criminals in the U.S. who defraud seniors have become more appropriate, it is unlikely that those you arrange to have charged will receive what you might deem a just punishment.
Better to dispense with privately. — Efforts to protect the image of a company by avoiding the bad publicity inherent in prosecuting a fraud case plays into the hands of scammers, who rely on this factor to elude authorities. Lack of accurate statistical data gives the impression that such occurrences are minimal. Less than 10 percent of fraud victims report the event to authorities.
Punish the closest person. — When the actual scammer is distant and the victimized, but still corrupted, embezzling employee is close at hand, punishment is often inappropriately misdirected towards the easier target. Often, the true criminals are totally forgotten.
We are aware and ready for the problem. — Waiting for a random and unexpected act that could hit any single employee may not be considered worthy of the resources needed to circumvent it. Awareness of the crimes that are targeting businesses and disseminating that information to staff may ultimately be your best and only defense.
Take the time to refer all employees to a fraud information resource that explains how they might be victimized against their better judgment. If you find your organization has been defrauded with staff as a conduit, remember to save some blame for the initiating scammer, not just the scapegoat. It could just as easily have been you — had your cape of invulnerability fallen off, that is.