Fraud Facts for Kids

Fraud (pronounced "frawd") is a serious crime where someone tricks another person. They do this to get something unfair or against the law. Most of the time, fraud is about getting money, either directly or indirectly.

The person who commits fraud is called a fraudster or a fraud. If something is "fraudulent," it means it's fake or dishonest. For example, a "fraudulent cheque" is a fake cheque. To defraud someone means to trick them in a dishonest way.

Fraud is against the law. A fraudster can be arrested and even sent to prison. Also, if you are a victim of fraud, you can sue the fraudster. This means you can take them to court to get your money or property back.

All countries have laws against fraud. But the exact rules can be a bit different everywhere. For example, in England, there are three main types of fraud:

Fraud by telling lies or giving a false idea.
Fraud by not telling important information that someone should know.
Fraud by using a special position (like a manager or a trustee) to trick people.

Less serious fraud cases are handled in smaller courts. More serious cases go to bigger courts where a jury (a group of citizens) helps decide the case.

What is Fraud?
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What is Fraud?

Fraud is like a dishonest trick. It happens when someone uses lies or deceit to gain something they shouldn't have. This gain is usually money, property, or a special advantage. The fraudster knows they are being dishonest. They want to trick the victim into doing something they wouldn't normally do. This could be giving away money, sharing personal information, or signing a document.

Why is Fraud Wrong?

Fraud is wrong because it breaks trust and harms people. It takes away money or property from innocent victims. It can cause a lot of stress and financial problems for those who are tricked. Laws against fraud are in place to protect people and keep society fair. When someone commits fraud, they are breaking these laws. This is why fraudsters can face serious punishments, like fines or prison time.

Different Kinds of Fraud

There are many ways people commit fraud. Here are some common types:

Online Scams

Many frauds happen on the internet. These are often called Internet fraud or online scams.

Phishing is a common online scam. Fraudsters send fake emails or messages. They pretend to be from a real company, like a bank or a popular website. They try to get you to click on a link. This link then asks for your passwords or bank details.
Fake Shopping Websites look like real online stores. But they are set up to take your money without sending you any products.
Investment Scams promise you a lot of money very quickly. They might ask you to invest in something that doesn't exist. Two famous types are:
- A Ponzi scheme is a scam where early investors are paid with money from new investors. It's like a pyramid of money. It always collapses eventually, and most people lose their money.
- A Pyramid scheme is similar. It makes money by recruiting more and more people into the scheme. Each new person pays a fee, and the money goes up the "pyramid." Only the people at the very top make money.

Impersonation and Fake Deals

Sometimes, fraudsters pretend to be someone they are not.

Impersonation means acting like another person. This could be pretending to be a police officer, a soldier, or even a family member. They do this to gain trust or get information.
Fake Work-at-Home Schemes promise easy money if you work from home. But they often ask you to pay for training or materials first. Then, you never get any work or money back.
Selling Fake Products involves selling items that are not what they seem. For example, someone might sell cheap speakers but claim they are expensive, high-quality ones.

Other Types of Fraud

Identity Theft happens when someone steals your personal information. This could be your name, address, or social security number. They then use it to open credit cards or commit other frauds in your name.
Credit Card Fraud is when someone uses your credit card without your permission. This can happen if your card details are stolen online or if your physical card is lost or taken.

How to Stay Safe from Fraud

It's important to be careful to avoid fraud.

Be Suspicious: If something sounds too good to be true, it probably is. Be wary of promises of quick, easy money.
Protect Your Information: Never share your passwords, bank details, or personal identification numbers (PINs) with anyone. Be careful about what you share online.
Check Sources: If you get an email or message from a company, check their official website or call them directly. Don't click on links in suspicious emails.
Use Strong Passwords: Make your online passwords long and complex. Use different passwords for different accounts.
Talk to a Trusted Adult: If you ever feel unsure about something online or if someone is asking you for money or information, talk to a parent, guardian, or another trusted adult. They can help you figure out if it's a scam.

Images for kids

A fake automated teller slot used to commit bank fraud upon bank patrons.
The highly decorated fake uniform worn by a man impersonating a "Marine" caught by two gunnery sergeants at Times Square in New York City, New York
An advertisement for possibly fraudulent "work-at-home scheme"
A fraudulent manufacturer's suggested retail price on a speaker