Helping Victims of Financial Fraud
Joshua Bailes, Christine Kieffer  -  2014/3/26
http://ovc.ncjrs.gov/ovcproviderforum
 
 
I support a mail fraud team for the U.S. Postal Inspection Service and am interested in knowing how to obtain complaint information relative to financial fraud victims that file with you. Is there already an avenue for that? Thanks.
 
1.  C Kieffer
 FINRA has 20 offices around the country, so that we can understand emerging issues affecting investors right in their own neighborhoods. Find the nearest office on this map (http://www.finra.org/AboutFINRA/Locations/) and reach out to our enforcement teams to establish a connection.
 
2.  C Kieffer
 FINRA’s Office of Fraud Detection and Market Intelligence (OFDMI) handles a range of financial crime investigations. They may be a resource for you in your own investigative work. Contact Tony Cavallaro (Senior Vice President, OFDMI) at 646-315-7319 to discuss your specific needs.
 
3.  Joshua Bailes
 Each agency has its own rules about obtaining complaint information. Additionally, the National Center does not take complaints. I suggest contacting a superior in your office to find out how to do so within your organization. In terms of the FTC Consumer Sentinel Network, law enforcement agencies can obtain access by registering. More info at:http://www.ftc.gov/enforcement/consumer-sentinel-network
 
 
What is being done to fix the negative impact a victim of financial fraud (such as identity fraud)suffers from a ruined credit score?
 
1.  Joshua Bailes
 Annalise, this is an ongoing issue for victims of fraud, especially identity theft. Presently, there are coalitions working on this issue and attempting to find a policy fix that would assist victims in clearing their credit report of fraud. Presently, many ID Theft victims obtain an 800 Social Security number that isn't recognized by many institutions and is often linked to their old number importing the fraud to the new number. Fixes are being researched. You can learn more at http://identitytheftnetwork.org/
 
 
What can state financial regulators (banking, securities, non-depository like payday lenders) do to help victims of financial fraud?
 
1.  C Kieffer
 They also need help understanding the reporting process - who does what and who may or may not be working on their behalf. See the “Taking Action” guide developed by the FINRA Foundation and the National Center for Victims of Crime for strategies for addressing major types of financial crime—including investment fraud, identity theft, mortgage and lending fraud, and mass marketing scams. This is the link to the PDF http://www.saveandinvest.org/web/groups/sai/@sai/documents/sai_original_content/p358016.pdf. The FINRA Foundation also makes available for order for free in hard copy. Go to the SaveAndInvest.org Fraud Center to order materials.
 
2.  Augustino Mirel
 i think that properly educating the staff with approved disclosures and further financial education for the public at the high school level would help
 
3.  C Kieffer
 You may be able to facilitate warm handoffs to other agencies more appropriate for the particular circumstances. And importantly, you can help victims set realistic expectations in terms of what the possibilities are for financial recovery (which may be difficult to achieve).
 
4.  C Kieffer
 In many cases, victims do not know where to turn. They may not have any idea where and how to report the fraud, and where to find reliable/unbiased resources. It also may be particularly difficult for them to trust others given the deceptive nature of the crime they have experienced. State regulators – and other advocates – can help by directing victims to as many unbiased resources as possible at the local, state and national levels.
 
 
What are some common SEC regulations that we should be aware of in explaining things to victims?
 
1.  C Kieffer
 It's helpful to know what conduct is prohibited in the securities industry: http://www.saveandinvest.org/protectyourmoney/reportaproblem/P124351. And what the options are for investors when it comes to complaints: http://www.finra.org/optionsforinvestors.
 
2.  C Kieffer
 We also recommend you call and speak to a representative if fraud is suspected. The SEC’s investor help line is 202.732.0330 and FINRA’s help line is 202.728-6964. You can also use the SEC’s "Fast Answers" web page, http://www.sec.gov/fast-answers, for general questions about the federal securities laws or your investments.
 
3.  C Kieffer
 This question comes up a lot. Knowing securities rules and regulations is not as important as knowing how to take action if fraud is suspected. The best course of action is to file a complaint or tip with the SEC or FINRA. Our organizations will evaluate from a rules and criminal perspective and follow up. Both the SEC and FINRA have information of our websites about how to file a complaint or tip. Both FINRA and the SEC have Fraud Detection experts who evaluate every fraud-related tip. Go here: http://www.saveandinvest.org/protectyourmoney/reportaproblem/
 
 
what is your definition of financial fraud and is it worse or easier to recover than from other types of fraud?
 
1.  C Kieffer
 ID theft may or may not occur due to deception or fraud but rather be outright theft. But it is such a widespread, important issue, and may co-occur with other financial exploitation situations, that we often include in our discussions.
 
2.  C Kieffer
 The Financial Fraud Research Center at Stanford University (www.fraudresearchcenter.org) has adopted this definition: Fraud is “the deliberate deception of an individual with the promise of goods, services or other financial benefits that are actually nonexistent, were never intended to be provided, or were grossly misrepresented.” Victimization of Persons by Fraud, Titus et al., 1995
 
3.  Joshua Bailes
 Fraud is difficult to recover from for several reasons. First, financial recovery is difficult because perpetrators are able to hide or spend the fraudulently taken money and the victim is unable to recover any funds through restitution or civil damages. Second, many state victim compensation funds do not provide for compensation for victims of financial crimes. Third, there is still a stigma around fraud that the victim somehow contributed to their own victimization. This stigma is very unhelpful, and prevents both reporting and a strong policy/governmental response to financial crime.
 
4.  Joshua Bailes
 Financial fraud is the use of deception to separate a victim from their money under false pretenses. Additionally, we include Identity Theft under the definition of financial fraud because the National Center understands that identifying information is often obtained through fraudulent means or, if obtained in some other method, is used fraudulently.
 
 
I'm a Victim Advocate with an Victim Assistance agency. We contact victims of all crimes in the county, including credit fraud. Other than referring these victims to their banks and credit monitoring programs, what other information can we give clients to help protect themselves from future threats or how to deal with the aftermath?
 
1.  C Kieffer
 Share these prevention tips for ID Theft: 1) Keep all personal and financial records in a locked storage device or in a password-protected electronic file. 2) When someone requests your Social Security number, ask if you can provide alternate information. At medical offices, use an identifier that is not your Social Security number. 3) Monitor bank and credit card accounts weekly. 4) Regularly monitor your credit reports. A free copy from each of the three major credit reporting companies is available every 12 months through www.annualcreditreport.com. 5) Shred all paper with identifying information before disposing of it. 6) Review the information at www.safechecks.com to find out how to order safer checks.
 
2.  C Kieffer
 It's an unfortunate fact, that past victims are frequent targets for revictimization. NCVC and the FINRA Foundation put together some prevention tips/guidance/resources in the Taking Action guide.PDF is online here http://www.saveandinvest.org/web/groups/sai/@sai/documents/sai_original_content/p358016.pdf. It's also free in hard copy - SaveAndInvest.org Fraud Center.
 
3.  Joshua Bailes
 In terms of prevention, it largely depends on the crime. Investment Fraud - Saveandinvest.org Identity Theft - http://www.consumer.ftc.gov/features/feature-0014-identity-theft Mass Marketing Fraud - stopfraud.gov
 
4.  Joshua Bailes
 A second recovery method is to seek a civil attorney to see if there is any lawsuit that the victim can pursue against the perpetrator or other responsible party. You can help victims find civil attorneys by referring them to the National Crime Victim Bar Association at www.victimbar.org.
 
5.  Joshua Bailes
 Perhaps the most important step in recovery is ensuring the victim has reported the fraud to law enforcement, and reported the fraud through the FTC's consumer complaint site. Both will assist in the investigation of the fraud and will allow the victim to pursue criminal justice.
 
6.  Joshua Bailes
 There are several steps for recovery outlined for identity theft, investment fraud, mass marketing fraud, and mortgage fraud in Taking Action: An Advocate's Guide to Assisting Victims of Financial Fraud. You can find it at www.victimsofcrime.org/financial-fraud
 
 
Will victims of financial crimes ever be eligible for mental health counsling with VOC?
 
1.  Joshua Bailes
 I would also add that the National Center for Victims of Crime works to include all victims of crime in all compensation programs because we believe all victims deserve access to funds that will assist in their recovery. You can learn more about our approach at victimsofcrime.org.
 
2.  Joshua Bailes
 I certainly hope so! In some states, compensation funds are already available to victims of financial crime. Presently, I am unaware of any set-aside in VOCA funds for financial crime victims, and this is mostly a state-by-state matter. The best approach would be to reach out to your state coalition for crime victims and find out what you can do in your state to encourage the opening of funds to financial crime victims.
 
 
A primary way to assist victims of financial crimes, including fraud, is making victims whole through the imposition and collection of restitution. What trends are you seeing in this area? Do you have statistics related to the collection of restitution annually, collection rates by year, and whether collection rates are rising or falling for cases in the federal system?
 
1.  Joshua Bailes
 From my colleague, Susan Howley. In general, tracking of restitution collection is very poor. A few states are trying to do a better job in tracking restitution and other outstanding court debts. California is one of those. Their Judicial Council did recently issue a report of statewide efforts to implement best practices for collection, and you may find some interesting information there. http://www.courts.ca.gov/documents/jc-20131213-itemR.pdf
 
2.  C Kieffer
 In many – perhaps most – cases of outright fraud, it is unlikely a victim will be made “whole” again financially. As advocates, we need to help them set realistic expectations about the possibilities for financial recovery. The SEC offers information for harmed investors about certain SEC enforcement actions with current restitution funds: http://www.sec.gov/divisions/enforce/claims.htm. FINRA enforcement actions may also provide restitution. We maintain a list of active claims funds on our site and also claims funds that have paid out restitution and are now closed: http://www.finra.org/investors/protectyourself/afteryouinvest/investorclaimsfundsrestitution/p252058.
 
3.  Joshua Bailes
 This is an excellent question and a topic that needs further research. I don't have an answer today, but I will do some research and post here within a week with an answer.
 
 
What would it take to force the banks and credit card companies to define the word "fraud" asa deception deliberately practiced in order to secure unfair or unlawful gain (adjectival form fraudulent; to defraud is the verb).[1] As a legal construct, fraud is both a civil wrong (i.e., a fraud victim may sue the fraud perpetrator to avoid the fraud and/or recover monetary compensation) and a criminal wrong doing ,Banks and CC companies define fraud as "fraud occurs when an unauthorized person accesses the value associated with a payment vehicle"
 
1.  Joshua Bailes
 I would be interested to know what changing a bank's definition of fraud would accomplish, in your opinion. Additionally, it is likely that each individual corporation in the banking industry defines fraud slightly differently.
 
2.  Joshua Bailes
 Defining fraud is often difficult because the crimes committed are often changing, so a general definition is preferred. However, legislating policy around a general definition is difficult. In that sense, the definition is always expanding to include more crime as we become aware of the methods used to commit fraud.
 
3.  Joshua Bailes
 I can't speak to the reason banks define fraud in this manner. Banks are highly regulated and are likely defining fraud within parameters dictated by government policy and regulation. Additionally, banks and financial institutions are generally concerned with the fraud that affects their customers, so they often define the term accordingly.
 
 
what connections are there between financial fraud and domestic violence? Is there different ways to help a victim when fraud is occurring as part of a power struggle in DV cases. Are there other crimes that occur at the same time as financial fraud?
 
1.  Joshua Bailes
 There are lots of crimes that co-occur with financial fraud. Elder abuse, domestic violence, and child abuse are the three major ones that come to mind. The multiple occurrences of criminal trauma to a person during their lifetime is called polyvictimization. Research in this area is new and ongoing, but we do know that polyvictims of crime are not uncommon, and need intervention early and often. Those who work with victims of abuse should be on the lookout for instances of financial abuse as well and ensure interventions are made to stop the financial abuse and assist in recovery.
 
2.  Joshua Bailes
 The methods of approaching a victim of intimate partner violence/DV are useful if the DV includes financial fraud. Safety planning is very important, both physical and financial. Victims of DV should be made aware that they need to protect their finances and address any fraud that has occurred.
 
3.  Joshua Bailes
 I'm glad you asked. Victims of intimate partner violence/domestic violence are very often victims of financial crime and abuse by their batterers. This comes in a variety of forms, including identity theft. The National Network to End Domestic Violence has great information on the intersection of these two forms of abuse: http://nnedv.org/resources/ejresources/about-financial-abuse.html
 
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