Fraud vs. scams: How to spot the difference and stay safe
As a cybersecurity professional and a busy mom juggling life with a toddler, I rely on technology for almost everything—from ordering groceries to paying my childcare provider through a payment app. But while digital convenience makes life easier, it also exposes us to rising risks. In 2023 alone, consumers lost over $10 billion to fraud, with investment and imposter scams leading the way. Globally, a staggering $486 billion has been lost to scams and fraud. These numbers aren't just statistics—they represent real people whose lives have been upended.
So, what’s the difference?
Though people often use 'fraud' and 'scams' interchangeably, they're not the same. Fraud broadly involves unauthorized access to personal information that results in financial loss. Think of identity theft or credit card fraud—these are large-scale operations, often affecting business, institutions and consumers alike.
Scams, on the other hand, are a specific category of fraud that tends to be more personal and direct. A scam usually tricks someone into voluntarily giving up money or sensitive information—like an imposter posing as a tech support agent, or a 'romance' that ends with requests for cash. They play on emotions, exploiting trust, fear or urgency.
Who is liable for fraud and scams?
When it comes to liability, not all fraud and scams are treated equally. In the U.K., new protections are set to require banks to share the burden of reimbursing victims of authorized push payment (APP) fraud. But in the U.S., the rules are different—if you authorize a payment to a scammer, it’s much harder to recover lost funds. This legal gap creates real challenges, but changes may be coming globally, with many countries reconsidering their fraud protections.
How can you protect yourself or your business from fraud and scams?
Mastercard recently hosted a panel discussion with experts from the Federal Bureau of Investigation (FBI) and the New York Police Department (NYPD) to gather top tips for staying safe.
Here are their three key recommendations:
Education
Fraudsters evolve quickly - and so should you. Learn how scams work, whether it’s an imposter scam or phishing attempt. Businesses can do their part by educating their customers—after all, informed consumers are the best line of defense.
In the U.S., resources like the Federal Trade Commission (FTC) and the Internet Crime Complaint Center (IC3) are invaluable. Check with your local authorities for the latest guidance on preventing scams.
Technology
Always double-check before sharing personal information or making payments, whether online or in person. Businesses need to invest in anti-scam technologies, monitor user behavior and provide clear messaging to make it easier for legitimate customers to verify their identity and identify risks.
Collaborate
Fighting scams isn’t a solo mission. Sharing knowledge and working with law enforcement builds stronger defenses. Businesses and consumers working together make it harder for scammers to succeed.
Mastercard’s commitment to fighting scams
At Mastercard, we are committed to empowering both consumers and businesses in the fight against fraud. We’re taking a proactive stance against scams through Scam Protect. This initiative takes a three-tiered approach—leveraging cutting-edge technology, comprehensive education and strong collaboration with industry partners and community—to ensure safer, more secure transactions for everyone.
Stay ahead of fraud and scams! Visit Mastercard's Scam Protect initiative today to empower your transactions and protect what matters most.
