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SCAMS VS FRAUDS
A Scam always involves money. A Fraud may or may not involve money on all occasions.
In a Scam the victim always loses money but, in a Fraud, it may bring disrepute to a person or organisation and also involve monetary losses.
A Scam may be a scheme or business transaction involving money and with the intention of cheating one or a group of people or people at large.
Scams are committed by e-mail/telephone/text messages or social media.
The person carrying out the scam is called a Scamster.
A Fraud is an Act by the perpetrator, whereby another person,” Victim” believes it to be true and incurs monetary or other losses and the perpetrator of fraud gains at the expense of the victim. It is also breach of trust by the perpetrator where the victim depends and acts believing it to be True. Such perpetrators are known as Fraudsters.
Generally, Frauds are much bigger in size than a Scam. Frauds are much serious and effect a whole organisation and at time effect public whereas scams are usually targeted at specific categories and smaller in size.
Frauds can be money laundering, financial frauds, bribery, Ponzi schemes, stealing cash and inventories and perpetrated by employees, management, vendors, bankers in collusion or a combination of two or more with the sole intention of causing monetary and other losses and make good huge monies for personal gains and luxurious living and also greed for money.
A scam may be perpetrated by a single person or a small group with the sole intention of targeting a specific victim and usually may take a form or false promises or at times even threat and coercion if the “Victims” falls prey to such a scamster’s calls, e-mails etc.
The amounts involved in Frauds may amount to Millions of dollars losses whereas Scams involve smaller losses as generally they are aimed at several target victims for smaller amounts.
A Fraudster is usually caught at the end of the day and civil and criminal charges are taken against fraud perpetrators.
A scamster may not be easily traced and also the Victims many a time do not bring to light their individual losses falling prey to a scamster.
There are several internal controls and checks and whistleblowing policies and other deterrents which ultimately catch the fraud perpetrators which is absent in the case of scamster as they operate single or a small group and are usually not accessible.
The examples of Scams are:
1.Job scams 2. Lottery scams 3. Rouge Police 4. Impersonating as law officers and threatening 5. Ransom calls 5. Nigeria 419 scam 6. Visa scam, plane tickets scams etc.
Some of the examples of Frauds are:
1.Misappropriation of cash and assets.
2.Collusion with vendors and false invoices
3.Manipulating accounting entries and passing false entries
4.Finacial statements irregularities and concealment or giving wrong information in financials.
5.Bribery, corruption, Money laundering
6. Diversion of funds for personal gains and manipulating accounts to hide such misuse of monies.
The frauds can be detected and prevented by appropriate red flags and internal control systems and independent checks and forensic audits and a counter check mechanism in an organisation and division of responsibilities.
The scams can be avoided by not falling prey from unknown sources for making money or falling prey to promises by unknown persons and reporting to police immediately if cheated.