How to Recover From Financial Fraud And Scams

Regardless of the causes and severity of the financial fraud you’ve experienced, there are things you can do to embark on the path to financial disaster recovery. Financial crime can be devastating, causing different financial and mental effects. To improve your chances of achieving full financial recovery, you should report the fraudulent activity as soon as possible to help government agencies, regulators, and law enforcement to pursue the perpetrators.

Fraud and Scam: What’s the Difference?

In theory, there is a difference between the terms “fraud” and “scam.” But in practice, they are often used interchangeably.

A fraud implies a deception – a breach of trust or confidence. It is a violation of civil law and a serious crime. The motivations for fraud can include monetary gain or discrediting an adversary or opponent. For example, if a partner uses their spouse’s information to obtain credit without their spouse’s consent, that person could be called a fraudster.

As for a scam, it can be defined as fraudulent activity, typically involving money. Scams come in different forms and reach us in different ways – in person, via email, via telephone, etc. For example, someone may have asked you to donate money to a charity organization that doesn’t exist or received an email saying that you’ve won a million dollars (and to make the money transfer, they will need your credit card details).

Fraud is a broader category of offenses, including more than just scams, while scams are a particular type of fraud. A fraud scheme is considered a more serious offense than a scam. In a scam, the victim can be tricked into authorizing a payment, while fraud is where payment is made without the customer’s authorization. Usually, banks and financial institutions will reimburse customers for issues related to fraud but not scams.

Steps to Recover from Financial Fraud and Scams

Many have experienced similar problems before you, meaning that the road to financial recovery is already paved. Finding ways to recover emotionally and protect your future financial health is critical, and these are the steps you need to take to reclaim power from the criminals and move forward with your life.

  1. Accept what happened

Accepting the reality of the situation and choosing to move forward is the first step towards financial recovery. You are the victim of someone’s fraudulent activity, and it’s devastating. However, that doesn’t matter right now – whatever happened, happened. Don’t live in the past and dwell on what you could’ve done differently; you will only make yourself feel worse. Otherwise, you will prevent yourself from making forward progress. Accepting reality will help you stop wasting your energy – the fact is that you are a victim of a financial scam, and resisting those thoughts is futile. Let go of it and think about your future because that’s the only way to help yourself.

Don’t stay in defensive mode; turn things around and launch your offense. Putting yourself down is a waste of precious energy.

  1. Report the fraud to regulators and financial institutions

Proceed with reporting the fraud to the right state, national, and federal government agencies and contact your local consumer protection agency. These institutions may help you and other consumers avoid a similar fraud. If the fraudster was able to steal your personal information and bank account or credit card information to acquire money from your accounts, you should immediately contact your financial institutions. Your bank is the first institution you should report the fraudulent activity to, and they will help you with determining the best course of action – stopping payment on a check, shutting down your current accounts, getting new credit or debit cards, and opening a new account.

  • Report to credit bureaus. Get in touch with all three credit bureaus and place an automated fraud alert on your credit reports. Also, you can freeze your credit report to prevent anybody from accessing it. These actions will decrease the risk of the fraudster using your personal information to obtain a credit card or loan.
  • Report to the SSA (Social Security Administration). If the criminal used your social security number to perpetrate the fraud, you would need to contact the Social Security Administration.
  • Report to your State Attorney’s Office. Your State Attorney’s Office keeps track of reported financial scams and other fraudulent activity within your state. To warn of this activity, they often create public service announcements and provide tools and tips to help you remedy the situation.
  • Report to the FTC (Federal Trade Commission). Visit the FTCs Complaint Assistant website to lodge a consumer complaint, and the fraud will also be entered into the Consumer Sentinel Network. The FTC uses the information from such fraud reports to create public warnings, while law enforcement uses it to stop ongoing fraud and track the perpetrators. However, this process won’t initiate a criminal investigation of your case, and you will need to contact the local police department directly.
  • Report to the police. After you have reported the fraud to the FTC, you need to file a report with your local law enforcement department. When submitting a report, you need to make sure it lists all your financial accounts affected by the fraud and be ready to provide all the necessary documentation. Doing that will help protect you from any further damages that might result from the theft. After you file the report, request a copy for your own records and write down the phone number of your police investigator on it (you might need it for future reference).

  1. Remove fraudulent information from your credit report

You can have any fraudulent information removed when contacting the credit bureaus. To draft your request, you can use the sample letter provided by the FTC. Along with the sample letter, you should include the details about which info is fraudulent, as well as a copy of your Identity Theft Report and identifying information. That way, you can block or remove the info from your credit report, and collectors will stop coming after you to pay any of the debts you didn’t create. Also, it would help if you started using a good credit monitoring tool in order to keep an eye on your credit report in case of revictimization.

  1. Change account passwords

Change the passwords on all your accounts that were affected by fraud. The best practices when creating a password include avoiding identifying or obvious information (e.g., date of birth), using diverse alphanumeric combinations, and not using the same password across all your accounts. To keep track of each new password, you should use a secure password manager.

  1. Recover your stolen funds

If fraudsters used your credit, debit card, or other financial information to make payments (perhaps by stealing your identity or cloning your cards), you should contact your bank or card issuer to notify them as soon as possible that you suspect you’re a victim of a scam or fraud. Victims of scams may find themselves liable for all the lost money. The bank or credit union will give you your money back after they receive a signed affidavit that you didn’t make the fraudulent payments (ie, it was beyond your control).

Also, you may be able to recover your lost assets through a civil lawsuit, mediation, or arbitration. For example, if a securities broker was involved in the fraudulent activity, you could file an arbitration claim with or without an attorney.

Importance of Healing Emotional Wounds

When we feel down, the brain recalls other moments in our life when we experienced similar feelings. Those moments may be previous low points in our life, and if those emotional wounds never healed, they can be reopened. Emotional effects that come as a result of financial fraud can also manifest physically, leading to problems with concentrating, feelings of fatigue, and poor-quality sleep. If you have been victimized, finding ways to take care of yourself will be very helpful.

  • Accept your emotions. Avoiding the confrontation with your feelings will only make things worse. However, feeling this way is normal, and you should take action to prevent them from lasting too long. Allow your emotions to happen, and they will begin to lose their intensity and power over you.
  • Take care of yourself. The recovery starts from within, and self-care can take many forms. You can relieve negative emotions or thoughts by breathing deeply and engaging in activities that you truly enjoy. It is also helpful to write down those confusing and stressful thoughts – journaling can be beneficial to your mental health.
  • Talk to your loved ones. Reach out to your friends and family members and talk about your problems. Gravitate towards people who are there to listen carefully and help you feel better.
  • Focus on things you can do to improve your situation. Sometimes, people get emotionally stuck in a difficult situation by continuously thinking about all the things they could’ve done differently. But it’s a thought pattern that they need to get out of to focus their energy on things they actually can control. For example, victims of financial fraud could educate themselves on financial scams, get involved with organizations that support fraud victims, and report the crime to the authorities.

The consequences of financial fraud and scams can be financial, mental, and emotional, and they range from short- to long-term consequences. But once it happens, all you can do is accept that you’ve fallen victim to identity theft and financial fraud and start working on a personal financial recovery plan. In case you are not able to get yourself through the situation, you should seek professional help (for both financial and emotional issues). Visit our Split® community platform to learn more about threats to your identity, safety, and security to find out how to protect yourself from scams and fraud. Discover how Split Credit Monitoring technology can help protect consumer information like online passwords and financial data from being used in types of financial fraud and scams.

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