The 4 Most Common Types of Fraud and Abuse

By scoutadmin - April 25, 2016

Fraud and abuse are on the rise in the U.S. In 2015, the Department of Justice announced that it obtained more than $3.5 billion in settlements and judgments from civil cases involving fraud and false claims. 

Healthcare fraud in particular is exploding, with more and more corrupt physicians, nurses, and providers raking in millions by deceiving their patients.

In light of these trends, it’s more vital than ever before for consumers, property owners, and business owners to be wary of fraud. Below are the 4 most common types of fraud and abuse.

Intellectual Property Fraud

Intellectual property fraud involves the theft of property that is protected under copyright, patent, trade secret, or brand protection laws.

Intellectual property theft encompasses a wide range of activities, such as one party illegally gaining access to protected material through misrepresentation or deceit; theft of intellectual property due to lack of registration; or miscellaneous intellectual property scams.

One of the most common types of intellectual property fraud is “inventor promotion fraud”. This involves luring an inventor into the alleged promotion/development of a project without ever rendering the services.

Persons posing as representatives of “promotion firms” will obtain up-front fees and then either leave with the money, or use the invention for personal gain. Other types of intellectual property fraud may involve direct copyright violations or infringement actions.

Government Fraud

Government fraud refers to acts which intentionally divest the government of funds through deception or other illegal activities.

Government fraud not only defrauds the municipality itself, but the thousands or millions of taxpayers it serves. Therefore, in government fraud cases, both criminal and civil charges are generally brought against the defendant.

The most common types of government fraud are procurement and contractor fraud. In procurement fraud, for instance, a company may use bribes to win a contract despite the fact that it did not make the lowest bid.

In contractor fraud, contractors bill the government for incomplete work, inflate the cost of labor supplies, and issue kickbacks. Government fraud may also involve the making of false claims pertaining to Social Security, defense contracts, or healthcare.

Penalties for government fraud are usually quite harsh, and under the False Claims Act, whistleblowers who expose it are rewarded with significant shares of the fines.

Healthcare Fraud

One of the biggest forms of government fraud is healthcare fraud. A wide variety of crimes fall under the umbrella of healthcare fraud, but in general, it involves the filing of dishonest healthcare claims in order to increase profits.

For example, corrupt practitioners may obtain subsidized or fully-covered prescription pills and sell them on the black market; file duplicate claims for the same service rendered; bill patients for care that was never rendered or equipment that was never provided; or alter the dates, service description, or identities of members or providers.

They may also modify medical records or intentionally report diagnoses incorrectly in order to maximize payment.

Patients can also commit healthcare fraud as well, by providing false information when applying for programs or services, forging or selling prescription drugs, using transportation benefits for non-medical purposes, and loaning or using another’s insurance card.

Because of the pervasiveness of healthcare fraud, statistics now show that 10 cents of every dollar spent on healthcare goes toward paying for fraudulent claims.

In the last year alone, health care fraud cost taxpayers billions of dollars, with practitioners stealing astonishing amounts from their practices and patients.

Financial Fraud

Broadly, financial fraud is the act of intentionally altering financial transactions for the purpose of personal gain. For example, a corrupt investment broker might present clients an opportunity to purchase shares in precious metal repositories, and send authentic-looking bond documentation to investors, when in reality, no such repositories exist.

One of the most common types of financial fraud is “get-rich-quick” schemes. These schemes offer high or unrealistic rates of return in exchange for a small investment.

Most get-rich-quick schemes assert that such investments are easy and risk-free, and that wealth can be generated through them with little skill, effort, or time. Due to increasing use of the internet, financial fraud is one of the fastest-growing areas of fraud, as it allows perpetrators to easily and anonymously steal personal information or even identities.

Scout Case Management Software

Even as fraud rates rise, fraud recovery rates are rising with them. Due to the efforts of lawmakers, auditors, case investigators, and criminal justice experts, more and more criminals are being discovered and apprehended.

Scout's Case Management Software makes it easier, by providing a web-based, collaborative portal to efficiently and effectively build cases. To learn more about our fraud case management software and request a free demo, click here.

Case Management Software

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