financial fraud is at an all-time high
american consumers lost a staggering 5.8
billion dollars to a range of schemes in
2021. this represented a 70 increase
over losses in 2020. this is part of a
bigger trend which is seeing more people
lose money to scams schemes and hacks at
a time when all of us should probably
know better consumers were just one
group hit hard by scams corporations and
even the government have seen a serious
increase in losses caused by fraudulent
behavior there are a few reasons behind
this trend which are worth exploring and
understanding because they can give us
clues about how these scams work how
they can be avoided and why record high
fraud figures might actually be a good
thing now even if you think you would
never fall for any of these schemes they
will still affect you history has been
littered with distinct spikes of
financial fraud before and it doesn't
end well if you never fall for any of
these schemes yourself so it's time to
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2.8 million people filed fraud reports
with the ftc in 2021 which was the
highest amount since the agency started
tracking this data in 2001. this means
that there are more attempts being made
than ever before fortunately only 25 of
these attempts led to an actual
financial loss but the people that did
lose money lost an average of 500
dollars if i asked you to think of the
typical fraud victim what comes to mind
probably an old grandparent that naively
thinks that everything on the internet
is real right well you would be wrong
younger americans were actually the most
frequent target of consumer financial
fraud schemes the reason that you think
of grandma is because you are probably
thinking of email scams and yes people
over the age of 70 are the primary
targets for those but consumer fraud
comes in all shapes and sizes the
average victim of a job opportunity
scheme was under 30 and lost almost 2
thousand dollars these schemes work by
promising a job to give the scammer
access to any of these 3 things money
personal information or free labor the
most basic job op scheme involves a
scammer posing as a job recruiter or a
headhunter for a well-known company
offering an amazing sounding job the
only catch is that they require a fee
for their service before you can start
your work real recruiters will never ask
for money and headhunters are paid by
the hiring company it sounds
straightforward but if you are a young
worker struggling to find a job and then
go through multiple rounds of fake
interviews only to be offered with what
sounds like an amazing position you too
might be tempted to take the risk and
give up a few hundred bucks to pay a
hiring fee variations of the scam will
have workers pay for uniforms home
office setups or training materials
before they can start work at a job that
obviously doesn't exist another common
job opportunity scheme will have hopeful
applicants hand over their bank account
details id and social security number to
an identity thief who will use this
information to take out loans without
the victim's knowledge if a random
person on the internet asked you for
your driver's license you would normally
tell them to [ __ ] off but it sounds like
a perfectly reasonable request from a
would-be employer another job
opportunity scheme involves people doing
weeks of work and then never being paid
this is a big problem amongst
freelancers who might work on one
project at a time and never receive
payment for it this type of scheme is
very hard to track and without proper
contracts in place it can be very hard
to prosecute too the shift to working
from home has accelerated these schemes
big time for obvious reasons these
schemers never meet their victims face
to face in 2019 a job interview that
didn't involve coming into the office
would have been out of the ordinary now
of course the entire employment process
taking place over zoom and email is just
business as usual added millions of
workers who are shifting jobs or
struggling to find employment in a
messed up jobs market and scammers have
not been short of opportunity the
costliest scam to hit consumers was
investment fraud with the average victim
losing over three thousand dollars this
is any type of scheme that involves
falsifying an investment opportunity to
gain money from a victim fraudulent
investment schemes range anywhere from
bernie madoff's 65 billion dollar ponzi
scheme which took money from some of the
richest people in america all the way
down to penny stock schemes targeting
unsophisticated investors who think two
thousand percent returns are realistic
the biggest addition to this space in
the last few years has been
cryptocurrency investment schemes this
space is so new that regulation hasn't
caught up with how to define stuff like
nfts and [ __ ] rockets people are
constantly exposed to stories about
people making millions of dollars off
being early investors in the right
virtual monkeys and greed gets the best
of them people are capitalizing on this
greed by creating multi-million dollar
pump and dump schemes that seem to
collapse every other week the
particularly attractive thing about
these games is that they have inbuilt
anonymity and a built-in way to launder
the scammer's ill-gotten gains the whole
space also builds off itself one thing
that scammers do to make their scheme
appear legitimate is to buy high-priced
nfts to use as their display
now i personally don't understand why
someone would think oh this guy spent
half a million dollars on a picture of a
monkey he must be legit but people do i
guess it's the equivalent of a sleazy
salesman driving a cadillac the scammers
buy these existing nfts which drives up
their price which generates more
headlines which brings more potential
victims into the world of cryptocurrency
if you think of this space as a gamble
you will probably be fine but if you
prefer regular gambling then you need to
be aware of investment fraud as well the
professional and amateur sports
protection act of 1992 or passport in
short effectively outlawed gambling on
sports here in the united states the law
was overturned in 2018 and it opened the
floodgates for states to legalize sports
betting which was quickly followed by
proprietors offering gambling online
less than four years later and americans
are now spending 92 billion dollars per
year in online sports books gambling has
its own problems but this massive market
has attracted a new breed of scammer
that will sell you tips on who will win
certain games all for a fee of course to
legitimize their schemes these scammers
will often bet on both teams in a game
and post the winning ticket to their
instagram after the fact to prove that
they are the winner this type of scheme
can be particularly devastating to
victims because not only are they losing
money that they paid to the scammer they
will also lose money by gambling on
worthless advice just remember if
someone has a formula for making money
by gambling they are never going to sell
it to you
consumer fraud is just one area of fraud
that is on the rise and it is grown hand
in hand with commercial fraud this is
the type of fraud impacting business and
governments a type of commercial fraud
that took off during the pandemic was
the illegitimate receipts of government
subsidies such as paycheck protection
loans the loose oversight of these loans
has led analysts to conclude that as
much as 15 percent or 76 billion dollars
worth of these loans were completely
fraudulent and are unlikely to be repaid
fraudulent companies are also becoming
more popular the big names like theranos
and nicola have made headlines but they
are just the tip of the iceberg in the
pre-ipo investment space private equity
has also ballooned in size in the last
decade more private equity firms in
larger fund sizes means more money to go
towards good ideas but also more money
to go towards ideas that don't work are
unmarketable or simply fraudulent even
normal businesses separated from
investment hype can fall victim to more
run-of-the-mill scams a classic scheme
involves a scammer sending messages to
company emails the email will forward
them a page that looks like a company
platform that prompts them to enter
their login credentials the fake page
will record these details and forward
them to a scammer who can now monitor
their email traffic the scammer will
then look for the people that are
responsible for payroll and expenses
once they have figured out a target they
will copy one of the invoices that a
company had previously paid to a
legitimate supplier but just changed the
bank details to their own most company
accountants are not going to
cross-reference the bank details on old
invoices even if they do the scammer can
just follow up the email by saying that
they have updated their details this
doesn't just affect small companies with
poor payment processes either a
lithuanian man was recently charged for
stealing over 100 million dollars from
facebook and google with a variation of
this scheme
okay so financial fraud is at an
all-time high what does this mean apart
from be extra careful and don't trust
anybody ever
well believe it or not this might
actually be a good thing the ftc itself
said that most financial fraud goes
totally unreported victims know there is
little to no chance of ever getting
their money back and all we'll get from
reporting the crime is a lot of
questions and feeling of humiliation
even companies do their best to cover up
the most minor breaches because they
don't want to be known as an easy target
for the next scammer the fact that
financial fraud reports are at an
all-time high means that people are
reporting it public awareness is a good
thing and more reports means that there
are more chances for the authorities to
catch these people we are also starting
to see people face consequences for
fraudulent activity in fields that were
previously difficult for institutions
like the fdc or sec to follow fraud is a
part of the free market and anytime
there is a new trend making people lots
of money there will be schemers on the
sidelines ready to take advantage of
people looking to make a quick buck now
if you enjoyed learning about how
fraudsters play their trade go and watch
my video on how jordan belfort stratton
oakmont scheme actually worked it's kind
of like the deleted scenes from the
movie that score cz cut because it would
only appeal to business and finance
geeks i'm sure you will love it thanks
again to skillshare for sponsoring this
video and making it possible for
everybody to keep on learning how money
works