Final answer:
The fraud scheme where cash is stolen and the situation is covered up by using subsequent receipts is known as lapping. This method differs from identity theft, which involves stealing personal information to commit fraud. Preventative measures and proper auditing are key in detecting and preventing these fraudulent activities.
Step-by-step explanation:
In a fraud scheme known as lapping, the perpetrator attempts to cover the theft of cash received from customer A by applying cash collected from customer B to A's account, then applying a receipt from C to B's account, and so forth. This type of fraud is a method of concealing the misappropriation of funds.
While lapping temporarily covers up the shortfall created by the theft, it can be detected through proper reconciliation and auditing procedures.
Identity theft, on the other hand, involves someone wrongfully acquiring and using another person's personal identification, credit, or account information without their permission. This can lead to significant financial damage to the victim, including drained savings accounts and large credit card debts.
It's crucial for individuals and businesses to be vigilant, use robust auditing systems, and protect sensitive information to prevent both lapping and identity theft.