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One should first understand what is Good Faith and what is Bad Faith.
In simple words Good Faith is when one believes in another in deciding or placing trust in such other person and such person do not deceive the person depending on him, by performing and discharging as agreed. It is a sincere belief or motive without any malice or desire to defraud others. Bad Faith means and includes where the person on whom trust is placed deceives such other person depending on him, by deceiving him and taking away money or things belonging to such person.
This article is an attempt to give a red alert and insight into such frauds, giving reference to some of some websites with for more detailed information on the subject:
“Bad Faith” is defined in Dictionary as under: Intentional dishonest act by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the means or intent to fulfill it or violating basic standards of honesty in dealing with others.
This concept is very much relevant in understanding Frauds. Fraudsters commit frauds with a “Bad Faith” where Victims act in “Good faith” and get deceived of their money, property or other things rightfully belonging to the Victim. Bad faith Losses are huge and are observed in various fields like- Insurance, Banking, Hospitals, “Trusted employees”, “Trusted Managements” and also Religious Organisations there are instances of “missing monies”, Illegal activities which again is again done in Bad Faith. The Bad Faith people can be any one. For instance, in an insurance claim, the insured or the insurance company may act in Bad Faith against the other in claims litigation. The insured may claim “staging an accident” or “escalating the damages” by “wrong estimates” in collusion with surveyors, technical persons or an insider, for higher claims, than actuals as it happens in auto accidents, fire accidents or claims of stocks lost in a fire etc. An insurance company also may act in Bad Faith by offering lesser compensation to the insured by taking advantage of the Insurer who is in “shock” after an accident or fire to his property and he believes in Good Faith what was offered by the claims settlement officer is true without suspecting that he was being deceived by purposefully misrepresenting the clauses in insurance policy. Insurance companies and Hospitals where such policies are payable collude to defraud the insurer, in the cases of accident victims. Check for the 12 Warning signals of Insurance Company Frauds “Link" in Red Flags Section of the website. Also, Bad faith Insurance companies delay processing claims, inadequate investigations into claims, wrong interpretation of insurance claims, under valuing claims etc. Bad Faith based frauds-(Religion) was alleged in instances of non-profit institutions -Churches, where some Catholic priests were sent to prison for crimes like drug trafficking, embezzlements. Many such frauds reported go unreported and the frauds are covered up internally. The following Link of Forbes give some allegations and details of Faith based fraud:
Similarly, there were reports of frauds by Temple priests in India and abroad as reported in news and media. High priest of Shiva Temple was convicted in US for bank fraud:
Another example of Temple fraud was Temple Rose Plotting scheme-Pune-India, as reported and alleged:
Temple fraud likely amounting to 140 Million -baht, in Thailand with respect to State grant in aid temples of 173 out of 498 cases are being probed by CNAC-Centre for National Anti-Corruption. For detailed information the following web site may be visited as reported in news and media:
As reported in Jan-Feb 2013 ACFE Magazine Bad Faith in Health Care is explained as under: “Fraud in health care is like in any other industry.
Though by and large majority of doctors and hospitals act in Good Faith there are instances of Bad Faith. Fraudsters with means and opportunity (Fraud Triangle) take full advantage to unjustly profit. Health care crooks both inside and outside includes doctors, patients, vendors, pharma companies as pharmacists.”
The various type of such health care frauds includes wrong billings, misrepresenting services that were done or not done, missing patient’s documentation, wrong diagnosis, corruption and kickbacks from pharmaceuticals and laboratories for prescribing medicines or for getting tests done that may not be needed etc.
For more details refer to ACFE article on the issue of (bad faith) Health frauds:
Non-banking financial institutions, chit fund and housing loans companies are another area where clients and customers believe in Good Faith the offers made by these categories of persons and organisations and place trust and put their hard-earned earnings in anticipation of high interest rates or promises to build houses or sale of plots of lands or promise of building houses.
However, there are several instances where the public were defrauded by such organisations by not honoring payment of interest as agreed or deliver other goods and services as per contract but funds are diversified or used for personal luxuries and go bankrupt when there is pressure of payment and delivery by the clients.
Thus, Bad Faith pays its part in cheating and defrauding the customers and clients who believe and trust such persons.
Similarly, Bankers and Banking institutions are also involved in defrauding the public who place their funds based on Trust.
Again, instances of Bad Faith by the scammers and fraudsters taking advantage of the good faith placed by gullible public, who lose their life savings.
The small reference list of the following links help the readers get an insight into such frauds that took place and give a Red alert.
The clients and customers must do their homework of back ground checks, cross verification of the institutions and persons behind such companies before parting with their hard-earned earnings and without placing Blind Trust on false promises and high interest rate payments.
Bad Faith and Frauds is demonstrated in the following links.