The 5 most common types of fraud:
1. Household employee theft
The scam: Unfortunately, people you employ sometimes misuse the trust you place in them and steal your money, property, or get credit in your name. The variations are endless, and sadly, perpetrators include “loyal” long-time employees.
Prevention: Do background checks on all new hires. Double-check all transactions on accounts for which employees have access.
Protection: Employee dishonesty policies are available for this type of scam and additional coverage may be accessible through your homeowners policy. If your staff is employed through a corporate entity like an LLC, your broker may be able to secure coverages through a commercial market.
2. Password hacking
The scam: Crooks steal your password, log onto one of your accounts, and cause trouble. They could transfer money from your bank, order goods billed to your account, or get information on your travels to plan a robbery or kidnapping.
Prevention: Focus on the important accounts—banks, brokers, and email accounts. Make sure each of them has a different password, so stealing one doesn’t mean getting keys to your whole kingdom. Sign up for two-factor ID systems that text you a unique security code when you log on from a new device.
Protection: Many homeowners policies offer optional cybercrime coverage enhancements. These policies often protect you against cyber related losses and assist with the cost of experts who help restore data, determine the cause of an attack, and more.
3. Pretend accidents
The scam: When an individual fabricates an accident hoping for a large payout.
Prevention: If there is an accident, try not to say anything that admits fault, and gather as much information as you can.
Protection: An excess liability policy, also known as an umbrella policy, provides coverage if you are liable for an event, such as a car accident, and often includes legal defense costs. It’s important to be sure that you have enough coverage in place to protect all of your assets in the event of a lawsuit.
4. Art and collectable forgeries
The scam: Trade in forgeries is shockingly common and often goes undetected for years.
Prevention: Buy only from reputable dealers, but don’t count on reputation alone.
Protection: Title insurance can help protect fine art collectors if a piece’s seller turns out not to be its rightful owner. Although title insurance can sometimes be costly, there aren’t an abundance of solutions in the marketplace for this type of scam. Therefore, be sure to do your due-diligence during the buying process to make sure you don’t purchase a Rembrandt with a fraudulent title.
The scam: Fraudsters convince you, a family member or employee to transfer money to their bank account. Often, they hack into your email to learn how money moves in your household. Then they pretend to be someone—real or made up—with a convincing story and the number of a far-off bank account.
Prevention: Limit who has access to your accounts. Have rules requiring verification, by voice, not email, for transfers above a certain amount.
Protection: There are multiple cyber and fraud policy endorsements that can provide coverage for this type of loss. If you aren’t sure you have the proper endorsements in place, check with your broker.
