Are you committing fraud?
Bending the rules where your finances are concerned might seem harmless enough but the consequences could be devastating.
Telling a white lie to your car insurance company or claiming extra housing benefits might not seem particularly serious – plenty of people do it after all. However, those who do risk a criminal record or even prison sentence.
Read on to discover the potential costs of some common financial crimes.
Know the law
Could you be committing a serious kind of car insurance fraud known as ‘fronting’?
This is when parents falsely claim to be the main driver of their children’s cars to lower insurance costs (as motorists under the age of 25 typically face sky high premiums).
While ‘fronting’ is a criminal offense, research from the Motor Insurers’ Bureau revealed more than one third of people believe it is a legal loophole they are free to exploit.
If you are caught ‘fronting’, your insurance company will invalidate your policy and may report you to the police.
Confess past indiscretions
Whenever you’re asked about previous criminal convictions, you should always come clean about past mistakes.
While you may not think a speeding ticket from three years ago has any bearing on your current car insurance premiums, your insurer might disagree. Having a history of reckless driving could make you seem riskier – which could affect your premiums.
And you should always tell the truth about any criminal convictions when you apply for a new job. Lying to a potential employer could leave you out of a job further down the line.
Bumping up your insurance claim
We probably all know someone who has exaggerated the value of their belongings when making a home or travel insurance claim.
Many of these people justify themselves by saying insurance companies expect customers to exaggerate. In fact, this is another kind of fraud.
Imagine your home was devastated by a flood or a fire. If you were caught lying to your insurer about the value of your belongings, the company may refuse to cover the damage or even report you to the police
Can you cheat the system?
State benefits are divided into two categories – non means-tested and means-tested. The former are paid to anyone who is eligible regardless of their financial position.
To claim means-tested benefits such as Jobseekers Allowance and Housing Benefit, people must prove their income and savings fall below a certain level.
If you need to apply for benefits, it’s crucial you declare all your income to the Department for Work and Pensions– including money from a partner or private pensions.
Withholding this information could result in a prosecution for benefit fraud. According to the Department for Work and Pensions, 56,493 benefits thieves were caught last year – which equates to 232 every day.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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