What Is Fraud?

 

What Is Fraud?

Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud. Fraudulent activity can be carried out by one individual, multiple individuals or a business firm as a whole.

KEY TAKEAWAYS

• Fraud involves deceit with the intention to illegally or unethically gain at the expense of another.
• In finance, fraud can take on many forms including making false insurance claims, cooking the books, pump & dump schemes, and identity theft leading to unauthorized purchases.
• Fraud costs the economy billions of dollars each and every year, and those who are caught are subject to fines and jail time.

Fraud Explained

Fraud involves the false representation of facts, whether by intentionally withholding important information or providing false statements to another party for the specific purpose of gaining something that may not have been provided without the deception.

Often, the perpetrator of fraud is aware of information that the intended victim is not, allowing the perpetrator to deceive the victim. At heart, the individual or company committing fraud is taking advantage of information asymmetry; specifically, that the resource cost of reviewing and verifying that information can be significant enough to create a disincentive to fully invest in fraud prevention.

Both states and the federal government have laws that criminalize fraud, though fraudulent actions may not always result in a criminal trial. Government prosecutors often have substantial discretion in determining whether a case should go to trial and may pursue a settlement instead if this will result in a speedier and less costly resolution. If a fraud case goes to trial, the perpetrator may be convicted and sent to jail.

Legal Considerations

While the government may decide that a case of fraud can be settled outside of criminal proceedings, non-governmental parties that claim injury may pursue a civil case. The victims of fraud may sue the perpetrator to have funds recovered, or, in a case where no monetary loss occurred, may sue to reestablish the victim’s rights.

Proving that fraud has taken place requires the perpetrator to have committed specific acts. First, the perpetrator has to provide a false statement as a material fact. Second, the perpetrator had to have known that the statement was untrue. Third, the perpetrator had to have intended to deceive the victim. Fourth, the victim has to demonstrate that it relied on the false statement. And fifth, the victim had to have suffered damages as a result of acting on the intentionally false statement.

Types of Financial Fraud

Common individual mortgage fraud schemes include identity theft and income/asset falsification, while industry professionals may use appraisal frauds and air loans to dupe the system. The most common investor mortgage fraud schemes are different types of property flipping, occupancy fraud, and the straw buyer scam.

Fraud also occurs in the insurance industry. Thoroughly reviewing an insurance claim may take so many hours that an insurer may determine that a more cursory review is warranted considering the size of the claim. Knowing this, an individual may file a small claim for a loss that didn’t really occur. The insurer may decide to pay the claim without thoroughly investigating since the claim is small. In this case, insurance fraud has been conducted. 

The Federal Bureau of Investigation (FBI) describes securities fraud as criminal activity that can include high yield investment fraud, Ponzi schemes, pyramid schemes, advanced fee schemes, foreign currency fraud, broker embezzlement, pump-and-dumps, hedge fund related fraud, and late-day trading. In many cases, the fraudster seeks to dupe investors through misrepresentation and to manipulate financial markets in some way. These crimes are characterized by providing false or misleading information, withholding key information, purposefully offering bad advice, and offering or acting on inside information.

Consequences of Financial Fraud

Fraud can have a devastating impact on a business. In 2001, a massive corporate fraud was uncovered at Enron, a U.S.-based energy company. Executives used a variety of techniques to disguise the company’s financial health, including the deliberate obfuscation of revenue and misrepresentation of earnings. After the fraud was uncovered, shareholders saw share prices plummet from around $90 to less than $1 in a little over a year. Company employees had their equity wiped out and lost their jobs after Enron declared bankruptcy. The Enron scandal was a major driver behind the regulations found in the Sarbanes-Oxley Act passed in 2002.

What is a Blog? – Definition of Terms Blog, Blogging, and Blogger

 Do you know what a blog is?

If you don’t, then you’ve come to the right place. In 1994, when blogs began, a blog was more of a personal diary that people shared online. In this online journal, you could talk about your daily life or share about things that you were doing. Then, people saw an opportunity to communicate information in a new way online. Thus began the beautiful world of blogging.

What is a Blog?

Definition | Meaning of blog:

A blog (a shortened version of “weblog”) is an online journal or informational website displaying information in reverse chronological order, with the latest posts appearing first, at the top. It is a platform where a writer or a group of writers share their views on an individual subject.

Today, there are more than 570 million blogs on the web. The number of bloggers in the USA alone is set to reach 31.7 million users by 2020.

What is the purpose of a blog?

There are many reasons to start a blog for personal use and only a handful of strong ones for business blogging. Blogging for business, projects, or anything else that might bring you money has a very straightforward purpose – to rank your website higher in Google SERPs, a.k.a. increase your visibility.

As a business, you rely on consumers to keep buying your products and services. As a new business, you rely on blogging to help you get to potential consumers and grab their attention. Without blogging, your website would remain invisible, whereas running a blog makes you searchable and competitive.

So, the main purpose of a blog is to connect you to the relevant audience. Another one is to boost your traffic and send quality leads to your website.

The more frequent and better your blog posts are, the higher the chances for your website to get discovered and visited by your target audience. This means that a blog is an effective lead generation tool. Add a great call to action (CTA) to your content, and it will convert your website traffic into high-quality leads. A blog also allows you to showcase your niche authority and build a brand.

When you use your niche knowledge for creating informative and engaging posts, it builds trust with your audience. Great blogging makes your business look more credible, which is especially important if your brand is still young and fairly unknown. It ensures presence online and niche authority at the same time.