How to Recognize Fraud

Fraud can take many forms, making it difficult to recognize. It involves actions like working illegally, cheating the benefits system, or issuing fake invoices. To help you identify it, here are some common examples of what fraud can look like.

Cash Payments Without Proof

If someone offers to renovate your home or fix your garden at a low cost but insists on cash payment only, and refuses to provide receipts or invoices, this could be a sign of illegal work. This person may be hiding income and avoiding taxes. Not declaring income or paying too little tax is considered tax fraud.

Too-Good-to-Be-True Investments

You’ve been saving money and want to invest. Suddenly, you’re presented with an opportunity promising extremely high returns. If it sounds too good to be true, it probably is. In many cases, the money disappears and ends up with scammers. When money meant for investment is misused by fraudsters, this is known as investment fraud.

Suspicious Payments

Someone wants to make a large purchase, like a luxury car, using only cash or a gift card with an unusually high balance. Transactions like these may be attempts to disguise money gained through crime. Turning illegal earnings into seemingly legitimate funds is a method called money laundering.

Other Types of Fraud

Fraud comes in many other forms. Some common ones include:

VAT fraud, which involves not paying VAT or claiming it back incorrectly
Bankruptcy fraud, where assets are hidden to avoid repayment to creditors
Intellectual property fraud, such as selling counterfeit goods or pirated software
Benefits fraud, where someone gives false information to receive public assistance

Why It Matters

Fraud always has victims. Whether it’s taxpayers, investors, or businesses, someone pays the price. Being alert to signs of fraud helps protect both you and society.