Which of the following statements about padded or exaggerated claims is NOT correct?

Padded or exaggerated claims typically fall under the category of "soft fraud," rather than "hard fraud." Hard fraud usually involves deliberate acts of deception like staging accidents or providing false information to an insurance company. In contrast, padded or exaggerated claims involve inflating the value of a legitimate claim or adding non-existent damages, which can often stem from a place of overstating costs related to a genuinely incurred loss.

Understanding this distinction is crucial as it highlights the motives and methods behind different types of insurance fraud. The other statements reflect various truths about padded or exaggerated claims: they do often involve inflated damages, can potentially lead to criminal charges if they are prosecuted as fraudulent actions, and originate from claims that, although legitimate in nature, have been manipulated.