Fraud vs. Scams: What’s the Difference?

Tara Payne

February 4, 2026 Print

Fraud and scams have the same devastating effect on consumers, businesses and communities. But what’s the difference between these two terms?

Unauthorized fraud is when a customer’s financial account is used without their authorization. Examples of this type of fraud include credit cards being stolen or accounts being exploited online.
Authorized payment scams occur with a customer’s authorization, but under false pretenses. For example, a customer may send money to someone falsely advertising a bike on Facebook Marketplace.

Fraud and scams are both significant problems in today’s payments landscape, and social media, telecom and messaging platforms spread and exacerbate them. Almost three-quarters (73 percent) of American adults have experienced an online scam or attack, and these are common across age groups. Over two-thirds (68 percent) of U.S. adults get scam phone calls at least weekly. One major bank linked nearly 50 percent of recent fraud complaints to social media.

Red Flags. The Federal Trade Commission outlines common red flags that indicate a scam.

Scammers may impersonate a trusted organization, such as a government agency or bank.
They may say there’s an emergency or a problem with your account.
They may pressure you to act immediately.
They tell you to pay in a specific way, such as with crypto or specific payment apps.

Tactics. Scammers use social engineering tactics, such as impersonating trusted institutions like banks or government agencies, and exploit technology, such as spoofing a bank’s phone number. Social media is a common thread in many scams, with fraudulent advertisements and fake profiles enabling scammers to reach more victims. Common types of scams include:

Spoofing. Scammers falsify the information transmitted to your caller ID display to disguise their identity. It may appear that an incoming call is coming from a local number, or from a trusted company or a government agency.
Robocalls. Robocalls are automated and/or autodialed calls to a phone, usually without the receiver’s permission.
Fake Ads. Fraudulent ads on social media help scammers target more victims by pretending to market a product or service. A recent Reuters investigation showed that 10 percent of Meta’s 2024 revenue was projected to come from ads for scams and banned goods. Meta shows its customers 15 billion scam ads per day, according to that investigation.
Check Fraud. Check fraud can take many forms, including check washing, when fraudsters steal checks from the mail, then use chemicals to erase the payee and amount while leaving the signature intact. They rewrite the check for a much higher amount to themselves. Checks are the payment method most often subjected to fraud, with 63 percent of respondents to an Association for Financial Professionals survey reporting that their organizations faced check fraud in 2024.

Romance Scams. Scams often involve social manipulation. Romance scams target victims through dating sites or apps and trick them into sending money. Consumers reported $1.14 billion in losses due to romance scams, according to 2023 FTC data.

What Consumers Can Do. Scams rely on sophisticated tactics, but common-sense measures can protect consumers:

Slow down and read carefully. Scammers depend on distraction, speed and the illusion of urgency.
Hang up and call your bank via the number on the back of your card to confirm if you receive a call claiming to be from the bank.
Only send money to people you know. Confirm a recipient’s phone number and exact name spelling before transferring funds.
Exercise caution when buying anything via social media.

What Policymakers Should Do. U.S. policymakers are increasingly forming a more united, coordinated effort to combat fraud and scams. Here are key steps BPI recommends.

Social media platforms should verify advertisers to stop scams before they originate and quickly take them down once fraud is reported.
The FCC and FTC should require telecom, social media and messaging app companies to monitor their networks and proactively notify victims.
Banks should be given a safe harbor to intervene when necessary to protect customers.
Congress and regulators should encourage and empower telecom providers, social media, messaging platforms and financial institutions to share data and information related to fraud and scams by creating a safe harbor to mitigate legal uncertainty about taking these actions.
The U.S. government should establish a National Anti-Scam Strategy to prioritize prevention strategies and align accountability.

Additional Resources

Fraud vs. Scams – What’s the Difference Download