Fraud vs scams; understanding the difference

In today's digital world, scams and fraudulent activities are common. In fact, recent reports indicate that Australians lost approximately $3.1 billion to scams and fraud in 2022 – an 80% increase on total losses recorded in 2021.¹

In this article, learn about common types of fraud vs. scams, how to possibly recognise them, and potential ways to help stay protected.

What is fraud?

Fraud is typically defined as the act of acquiring information or causing a loss through deception or other dishonest methods.²

What is a scam and how is it different to fraud?

A scam generally aims to trick someone into providing money or personal information. Scammers may exploit various channels like online platforms, phone calls, or fake personas to gain a victim’s trust for their own financial or personal gain.³

So, what’s the difference between scam and fraud? The meaning of fraud is typically a broader term that covers any intentional dishonest activity. On the other hand, a scam may refer to a type of fraud that can involve a deceptive scheme with the intention to exploit someone directly.

Here are some examples of common types of scams in Australia:⁴

• Investment scams
• Dating and romance scams
• False billing
• Phishing
• Remote access scams
• Identity theft
• Jobs and employment scams
• Online shopping fraud

It may be hard to tell if something is a scam. Here are a few of the potential differences between scams and fraud:

Authorisation

Fraud typically happens without a victim's knowledge or approval, allowing fraudsters to carry out their deceptive acts without authorisation. In contrast, scams tend to appear authorised because victims may willingly participate or give consent, often due to the scammer's presentation of misleading information or enticing offers.

Sharing personal information

With fraud, a criminal typically acquires someone’s personal or financial information through unauthorised access. Scams normally rely on victims willingly sharing their information.

This is often due to being misled by false pretences presented by the scammer. The victim may be convinced, through deceptive information or enticing promises, to provide their personal information or participate in a transaction, believing it to be legitimate.

Return of funds

Another difference is that in most cases it may be easier for victims to retrieve their funds with the help of their financial institution as access to their funds happened without their permission or knowledge.

What to do if a scam is suspected?

If an individual suspects they may be a victim of a scam, Australia’s National Anti-Scam Centre recommends the following steps:⁵

1. Report the scam as soon as possible by contacting the bank or financial institution. Request they stop any transactions.
2. To help limit or minimise the damage, contact IDCARE, Australia and New Zealand’s national identity and cyber support service.
3. Report the scam to the National Anti-Scam Centre, as well as via the police’s ReportCyber platform.

How to help stay protected

Anyone can be affected by a scam. Here are some potential ways to help stay protected:⁶

• Remain vigilant: Keep an eye on all transactions, especially when dealing with unfamiliar or unexpected requests.
• Regularly check financial statements: Review bank and credit card statements regularly to spot any unauthorised transactions.
• Be cautious with suspicious messages: Never click on links or download attachments from unknown or suspicious senders or sources.
• Protect personal data: Don’t share sensitive information, especially if unsolicited requests are made. Also, use secure online payment providers when completing transactions.
• Verify requests: Before providing information or making transactions, verify the legitimacy of the request through official channels or by contacting the organisation directly.
• Stay informed: Keep up to date with the latest scam tactics and fraud schemes through the National Anti-Scam Centre to be better prepared to help identify and avoid potential threats.