14TH NOV 2023
Fraud is pervasive. And it refuses to abate. The Association of Certified Fraud Examiners (ACFE) believes education holds the key to reversing this trend. This is how the idea of International Fraud Awareness Week was born.
Fraud is both simple and more complicated than you think. At its simplest, fraud occurs if you lie to deprive an individual or entity of their money or property.
Recently, we learned how to stay safe from cyber crimes during Cybersecurity Awareness Month. We looked at some great actionable insights and tips for training your workforce to defend against external threat actors.
This week, we explore why fraud happens and how to fight different types of fraud. These types include financial fraud, cyber fraud, and white-collar crimes.
Let us begin.
International Fraud Awareness Week is an annual global event held in November. It dedicates itself to promoting fraud awareness and educating individuals and organizations about the importance of fraud prevention and detection.
This event aims to show how fraud affects businesses, governments, and individuals. It also promotes cooperation between public and private sectors to fight against fraud.
According to Black’s Law Dictionary, fraud is considered a crime when:
That's the legal definition. How about we look at why people commit this crime?
Why do people commit fraud? It is all due to something called the Fraud Triangle.
The Fraud Triangle is the creation of Dr. Donald Cressey, who studies criminal behavior for a living. He also wrote the manual on fraud examiners.
The good doctor says that three primary motivations lead to fraud-based crimes. For a fraudulent incident to happen, the embezzler thinks of:
Let us look at a brief snapshot of the impact of fraud.
The jury is in. Losses from fraud are growing year after year.
The most vulnerable group? Young adults aged 20-29 are reportedly getting targeted more. As for older adults aged 70-79, they are losing more money to investment scams as well as imposter scams.
The biggest scams? FTC reports that in 2022, people lost the most money to:
Fraudulent bank transfers - $1.5 billion
Cryptocurrency - $1.4 billion
Social media scams - $1.2 billion
Identity theft - more than 1.1 million reports
As you can see, there is a strong need to minimize the impact of this crime with fraud awareness and education.
You know how they say that prevention is better than the cure? That’s true for fraud prevention, too.
Here are a few common tips that can help in prevention and detection of fraud:
Fostering a feeling of fear and urgency in their targets is a favorite with fraudsters. Messages that go like “Do this or something terrible will happen” tend to play on a person’s fears.
Take a deep breath, and give yourself a minute to digest what’s going around. In many cases, that can help you discern fraudsters.
Another superb piece of advice for fraud prevention is to put your detective hat on and ask questions. Fraudsters usually don’t hold up well to scrutiny. This applies to anyone who calls or emails you.
And what’s more, you can ask a trusted friend or family member what they think about what you’re being told. It helps you better understand whether the information you’re being provided is fake or not.
How to stop fraudsters? By reporting it to the appropriate authorities.
Reporting fraud ensures that the perpetrators do not continue to scam more people in the future. You can start by sharing your experience with the local consumer agency, anti-fraud experts, even the state attorney general.
Unlike fraud, promoting anti-fraud awareness doesn’t cost much. If anything, practical fraud awareness training can mitigate risks, contribute to improved anti-fraud controls, and create proper reporting protocols and anti-fraud prevention policies for your organization.
IBM reports that employee training can reduce the average breach cost by $232,867. Investing in a cybersecurity awareness training program can help improve your employee’s readiness against fraud today.
