A basic way to differentiate fraud and scams is by whether the transaction is authorized or unauthorized. Keep reading to see examples and learn more about the differences between fraud and scams.
PAYING IT SAFE
Understanding Fraud & Scams
As a consumer or small business owner, it’s important to understand how fraud and scams are defined because there may be differences in the protections offered by your bank or credit union.
What is Fraud?
If someone gained access to your bank account and made a payment without your permission and you weren’t involved in the transaction in any way, this is typically considered fraud since it was unauthorized activity. If someone gained access to your account and stole money or sent it without your permission, this could be defined as fraud.
Immediately report suspicious or unauthorized activity to your financial institution. If you did NOT authorize a payment, you may be able to get your money back.
Example
Someone found your credit card and started making purchases without your permission.
What to do
Immediately report suspected unauthorized activity to the payment platform you used or your financial institution.
Can you get your money back?
Because you did not authorize a payment, you are typically able to get your money back.
What is a Scam?
If you were knowingly involved in the transaction and you gave the “ok” to authorize a payment, this is typically defined as a scam. Even if you were tricked or persuaded into authorizing the payment for goods or services someone said they were going to provide but they didn’t fulfill, you may not be able to get your money back because you technically authorized it. A few types of scams reported involve purchasing tickets, buying puppies, but it’s a good idea to know about other types common of scams.
Example
You sent someone money to pay for concert tickets but never received them.
What to do
Contact the payment platform you used or your financial institution if you think you’ve been scammed.
Can you get your money back?
Because you authorized the payment, you may not be able to get your money back.
