How Well Is Your Organization Fighting Fraud?

November 17, 2020
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Is your organization losing 5% of its annual revenue to fraud? According to the 2018 Report to the Nations on Occupational Fraud and Abuse from the Association of Certified Fraud Examiners, that’s how much organizations lose worldwide.

Fraud is a pervasive problem, but the right precautions can help reduce the risks. International Fraud Awareness Week is November 15 to 21. Take this opportunity to check how well your organization is fighting fraud.

Can You Identify a Fraudster?

We all know that money doesn’t grow on trees. If someone appears to be living beyond their means, that person could be a fraudster.

According to the Association of Certified Fraud Examiners, 85% of fraudsters display at least one behavioral red flag. In addition to living beyond one’s means, other common warning signs include financial difficulties and unusually close associations with vendors or customers.

Organizations can use these red flags to spot – and avoid – potential fraudsters. See the Behavior Red Flags of Fraud for more possibly warning signs.

Do You Know the Schemes?

Fraudsters have a lot of tricks up their sleeves. Knowing them could help you avoid becoming the next victim.

The FBI has compiled a list of common scams and crimes against individuals and organizations. The list includes many cybercrimes, such as spoofing, phishing, and ransomware, as well as investment fraud, identity theft, charity fraud, and numerous other schemes.

For businesses, one of the most financially devastating scams is business email compromise. These scams often start out with a spoofed email or website that appears to come from a trusted source, such as a CEO or vendor. The scammer then engages in a series of communications meant to gain the target’s trust before requesting a fraudulent transaction. This transaction is often a wire transfer, but the scammer could also request gift cards or have a legitimate payment sent to the wrong address or bank account. Payroll diversion is also a common goal.

Business email compromise is a major problem, and it appears to be getting worse. The FBI says that between June 2016 and July 2019, the IC3 received complaints of business email compromise schemes totaling more than $26 billion in losses.

Are You Taking Anti-Fraud Actions?

Fraud prevention requires vigilance. Basic anti-fraud steps that should be in place include the following:

  • Training workers on fraud prevention.
  • Conducting risk assessments to identify potential vulnerabilities to fraud.
  • Implementing policies and procedures to report and respond to fraud.

The Association of Certified Fraud Examiners provides a Fraud Prevention Check-Up that organizations can use to assess their fraud prevention process. Other resources include guides, videos, and infographics that can help organizations educate their teams on fraud and fraud prevention.