Data Breaches: How to Make a Difference in 2019

Data Breaches: How to Make a Difference in 2019

The Identity Theft Resource Center (ITRC) has been analyzing data breaches since 2005 to better understand the importance of cybersecurity and to assist victims of these incidents. Consumers and companies are suffering from these breaches in the business, travel, financial, healthcare and more industries. In their most recent report analyzing the data from 2018, they evaluated more than 1,200 data breaches that were publicly disclosed. Last year large corporations, government agencies and online businesses all fell victim to data breaches. These breaches exposed more than 446 million records of consumer personal identifying information (PII). With companies and consumers suffering from the impact of these incidents, it’s time to focus on what professionals in the industry can do to help.

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The Real People Behind Identity Theft Statistics

The Real People Behind Identity Theft Statistics

Data breaches and identity theft continue to impact both businesses and consumers significantly. This year alone (as of November 2, 2018), there have been 1,027 data breaches which exposed over 57,667,911 million records. The Federal Trade Commission (FTC) also reported in their March 2018 Consumer Sentinel Network Data Book that they received 1.1 million reports of fraud and 371,000 reports of identity theft in 2017.

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3 Ways to Avoid Fraud While Traveling

3 Ways to Avoid Fraud While Traveling

As I sat in the taxi in Jackson, Mississippi, waiting for the cab driver to “call in” my credit card because he had no credit card machine or app on his flip phone, I cringed. Just four days prior, I was teaching an ACFE webinar on travel fraud and here I was, hamstrung by an antiquated process that put my credit card at risk.

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Insider Fraud: Preventing a Catastrophic Event

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GUEST BLOGGER

Bruce Dubinsky, CFE, MsT, CPA, CVA
Managing Director, Duff & Phelps, LLC

It’s no surprise that companies have fraud on their mind these days. As of May, a Verizon report revealed that 6 million data breaches in businesses worldwide had already occurred in 2016. In response, steps have been taken by organizations to protect themselves from outside hacker threats — but this might not be enough. Unbeknownst to many, the bigger danger to these companies and their customers’ data arises from those who are trusted the most: 50 percent of all security incidents are caused by people inside an organization. According to the 2016 ACFE Report to the Nations on Occupational Fraud and Abuse, a typical organization loses an estimated 5 percent of revenue a year as a result of fraud.

The onset of International Fraud Awareness Week, November 13-19, provides a compelling opportunity to discuss the dangers and prevention methods of insider fraud.

We can start with the understanding that learning that your company’s confidential data was stolen, not by a hacker, but by an employee, is a catastrophic scenario that no organization wants to face. Although sometimes these data breaches are unintentional — perpetrated by careless employees — in most circumstances, they are the result of malicious intent. Oftentimes, personally identifiable information (PII) is stolen to be sold on the black market or used to receive social security benefits, open new credit card accounts or to apply for insurance benefits.

The ACFE report finds that a perpetrators’ level of authority is directly related to the magnitude of the fraud, as the losses incurred from the scheme by an owner or executive (about $703,000) are more than four times the median loss by managers (about $173,000) and nearly 11 times as much as the loss caused by rank-and-file employees (about $65,000).

Companies can combat insider fraud by developing safety measures that emphasize a team approach, through which all areas of the organization or agency work together to identify threats and prevent them from escalating into significant losses. The Report to the Nations found that when organizations adopt and encourage an “if you see something, say something” approach, they can mitigate losses by up to 54 percent. In addition, insider fraud can be detected up to 50 percent faster.

Consistent with this approach, the most common detection method in the ACFE study was from employee tips (39.1 percent of cases). Organizations that had reporting hotlines were also much more likely to detect fraud through these tips than organizations without a reporting outlet (47.3 percent compared to 28.2 percent, respectively). Additionally, when fraud was uncovered through methods such as surveillance and monitoring or account reconciliation, the loss duration of schemes was lower than when the schemes were detected through passive methods, such as notification by police or by accidental discovery. Many agencies also had success with professionally-manned hotlines for whistleblowers.

There are valuable resources available to help your company take the necessary steps to prevent insider fraud. The LexisNexis® Fraud Defense Network, of which I am a board member, provides resources such as the Identity Fraud Protection Playbook and technology for cross-industry fraud prevention. Take the quiz to see how your fraud prevention efforts measure up to the competition and collect valuable insights on preparing for this significant threat.

You can find more free resources to spread fraud awareness, like social media badges, infographics and videos, at FraudWeek.com.