Not all fraud is intentional. People can commit fraud accidentally, but even unintentional fraud can come with financial penalties — and even jail time in some cases.
From filing taxes to applying for the best credit card, you may accidentally commit fraud. But how do you know what these mistakes are?
Thankfully, you can take steps to avoid accidental fraud, and you can usually correct mistakes if you’ve already made them. Here’s what to watch out for.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Reporting wrong income on tax filing
Taxes are complicated, and sometimes people make mistakes. Something as simple as forgetting to include a 1099 or W-2 can result in inaccurate income reporting. But if it was an honest mistake, the IRS isn’t likely to go after you for tax fraud.
You can correct your mistake by filing an amended tax return. However, there are time limits for filing amended returns, and the IRS will hit you with penalties for each month that you owe. So, the sooner you correct the mistake, the better.
Overestimating tax deductions
Claiming tax deductions you aren’t entitled to and inflating deductible expenses are considered tax fraud when done intentionally. While the IRS might not require you to attach proof of eligibility to your tax return, you’ll need to if your return is selected for an audit.
And you’re not off the hook once Tax Day has come and gone. The IRS can audit tax returns from three years prior — or even longer in some cases.
Most tax software can guide you and help determine which credits and deductions you qualify for. However, it’s important to keep receipts and maintain good records regardless of how you prepare your return.
Using another person’s credit card
Purposely using someone else’s credit card without their permission is always fraud, but even using a family member’s card with their permission can be considered fraud.
For example, a cardholder might authorize someone to make a specific purchase, but the person purchases something else or spends more than the cardholder authorized.
To avoid committing this type of fraud, don’t give your credit card to anyone. If you live with roommates or extended family, don’t keep cards in a drawer that anyone has access to.
If you want more people to have legal access to your credit cards, consider making them an authorized user.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
Making an error on a credit card application
To get a credit card, you’ll generally need to prove you can afford to pay that money back, so some people may be tempted to inflate their income when applying. However, doing so is considered fraud and could come with financial penalties and even jail time.
If you’ve made a genuine mistake, you can contact the credit card company to report your error. But avoid lying on a credit card application. Even if the credit card company never catches you, you could further damage your financial situation by using a credit card you can’t afford.
Disputing a credit card charge you forgot you made
It’s always a good idea to review your credit card statements and check for fraud. However, it’s not impossible to accidentally report your own purchase as a fraudulent one. Perhaps you simply forgot, or maybe the transaction is listed by a name other than the merchant’s name.
If you realize you’ve disputed a legitimate transaction, you can contact the credit card company to report your mistake. A one-time mistake like this isn’t likely to cause you issues, but repeated offenses could prevent you from being approved for credit in the future.
Trending Stories
Disputing a charge to get a refund when you aren’t entitled to one
Some cardholders might contact their credit card company for a refund if they’ve forgotten to cancel a free trial subscription or can’t return an item because of the merchant’s refund policy. Bypassing the merchant might seem like an easy way to get your money back, but doing this is considered fraud.
It’s a better idea to keep track of free trials and cancel them before you’re charged. Also, read merchants’ refund policies before you buy. This way, you won’t end up paying for things you don’t want, and you won’t accidentally commit fraud.
Not updating insurance information
If you change insurance companies, it’s important to update your information as soon as possible. Not doing so could result in claims being filed with your old insurer. However, if you’re no longer covered by that insurer, the claim is illegitimate.
Insurance fraud can also happen when people omit information to obtain a lower premium. If you forgot to include important information or accidentally answered something incorrectly, contact the insurance company to correct the mistake on your application.
Working while collecting certain benefits
Fraud can occur if you collect worker’s compensation benefits but continue doing similar work. It’s also fraud if you fail to report earned income while receiving unemployment benefits or any income-based government benefits.
The easiest ways to avoid committing accidental fraud while collecting benefits are to report all your income honestly, terminate benefits when you no longer qualify for them, and never work under the table. (Working under that table can pose the risk for tax fraud, too.)
Bottom line
If you made an honest mistake, try not to panic. Most companies and organizations allow you an opportunity to make things right. The important thing is to report and correct the mistake as soon as possible. Waiting too long could work against you and lead to additional penalties.
If your lender, the IRS, or another agency determines you’ve committed fraud intentionally, you could face higher fines or, in the worst case scenario, criminal prosecution.
Most people are trying to make the right money moves to improve their lives. Don’t let an honest mistake derail your hard work.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.
Author Details