The Response to Fraud in 2020
December 10, 2020
Fraud is on the rise globally and fraudsters are continually developing new ways to attack businesses and customers. Millions of people are affected by fraud every year and it is estimated that in 2019, criminals made $4.2 trillion from fraudulent activity worldwide.
In this shifting landscape, organisations need to keep on top of their anti-fraud measures ensuring they’re up to the job of protecting their customers and deal with breaches accordingly.
Fraud is a global problem affecting all organisations worldwide, but occupational fraud is frequently undetected and often never reported. At the highest level, there are three categories of occupational fraud:
- Asset misappropriation, which involves an employee stealing or misusing the employing organisation’s resources. This occurs in the vast majority of fraud schemes (86% of cases) but, these schemes also tend to cause the lowest median loss at $100,000 per case.
- Financial statement fraud schemes, in which the perpetrator intentionally causes a material misstatement or omission in the organisation’s financial statements. These are the least common (10% of schemes) but the costliest category of occupational fraud.
- Corruption – which includes offences such as bribery, conflicts of interest, and extortion – falls in the middle in terms of both frequency and financial damage. These schemes occur in 43% of cases and cause a median loss of $200,000.
The ACFE’s most recent study is the largest worldwide on occupational fraud and includes perpetrator data from more than 2,000 fraud cases. The study found that:
- 80% of perpetrators received some sort of punishment, with many organisations dealing with fraudulent individuals in-house and dealing out corresponding punishments.
- Over a quarter of fraud cases studied resulted in a civil lawsuit where most resulted in judgement for the victim, the median loss being $400,000.
- Nearly two-thirds of cases were referred to law enforcement and over half of these had a guilty plea entered.
Fraud is on the rise globally and criminals are using more and more sophisticated methods to steal personal information but organisations are getting better at detecting and punishing fraudulent acts. Check out our infographic below where we explore the response to fraud in 2020:
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