‘Tis the Season – for Fraud?

GUEST BLOGGER

Scott Patterson
ACFE Senior Public Relations Specialist

We receive questions from the media about all sorts of fraud-related things. Business writers and reporters often ask about trends and the latest statistics on fraud – sometimes on specific issues like mortgage fraud, identity theft, healthcare fraud and others. Sometimes the need is for more general statistics, like those in the Report to the Nations on Occupational Fraud and Abuse.

It stands to reason, then, that during a certain time of year – such as the holidays, in this case – people would be interested to know whether fraud increases, decreases, or stays the same. What impact, if any, does holiday shopping and everything related to the season have on fraud occurrence?

That’s a question to which we didn’t have an answer. And neither did anyone else, so far as we could find. So we turned to our community of experts – Certified Fraud Examiners (CFE) – and we asked them.

On average, respondents told us that they believe fraud losses increase during the holiday shopping season by nearly 20 percent (compared to the rest of the year). And they think the single biggest contributing factor is increased financial pressure on perpetrators (61 percent), followed by an increased opportunity to commit fraud (24 percent) and increased rationalization for fraud (10 percent). These three factors are represented in Dr. Donald R. Cressey’s “Fraud Triangle” and their presence is considered necessary in order for fraud to occur.

Employee embezzlement/theft is the fraud scheme most likely to increase during the holidays, according to 56 percent of survey respondents – while half of them also reported that fraud by unrelated third parties, such as identity theft and con schemes, will increase.

Another area of concern in the findings: Despite seeing an apparent increase in fraud during the holidays, the majority of our survey respondents reported that their organization does not increase efforts to prevent or detect fraud during this time.

These survey results reinforce the connection between financial pressures and the risk of fraud. The holidays can be wonderful in many ways, yet they can also represent added stresses and pressure that may influence decision-making. During a tough economy, gift shopping might bust the budget. Holiday bonuses may be trimmed down or nonexistent. Job responsibilities and hours might be increased with fewer employees to do the work. These factors could lead to more fraud – which suggests that a certain degree of vigilance by business owners and other organizational leaders is appropriate.

You can read more about the study on Accounting Today. Also, check out the ACFE's Fraud and the Holidays infographic.

I’d like to thank the nearly 900 CFEs who participated in the survey, and also wish everyone a fraud-free holiday season.

It’s Fraud Week – and the Spotlight is On

GUEST BLOGGER

Scott Patterson
ACFE Senior Public Relations Specialist

International Fraud Awareness Week is upon us. This is an exciting time for supporters of this grassroots movement, many of whom are hosting trainings, sharing anti-fraud information in newsletters and emails, and engaging social media to shine a spotlight on fraud.

As you know, the ACFE provides resources for individuals and organizations to help them in their fraud prevention and detection efforts during Fraud Week (and year-round). One of these resources is our bi-annual Report to the Nations on Occupational Fraud and Abuse. This study is based on a survey of Certified Fraud Examiners (CFEs) and is loaded with stats on fraud loss, detection methods, behavioral red flags and other invaluable information. During Fraud Week, we thought it would be fitting to have a candid discussion with the authors of the Report in our monthly podcast, Fraud Talk.

The Report is co-authored by John Warren, J.D., CFE, the ACFE’s Vice President and General Counsel, and Andi McNeal, CFE, CPA, Research Director for the ACFE. They sat down with me to record the podcast, and they shared so much insight about the making of the Report that we decided to split the interview into two podcasts.

In the interview, John and Andi discuss the history of the Report, how the research is compiled, what interests them the most from the data, and – perhaps most importantly – some of the key takeaways from the study, both for anti-fraud professionals and business leaders in general. It’s really interesting to hear how this engrossing and oft-cited Report takes shape. I hope you enjoy hearing about it from John and Andi as much as I did.

While doing a little research for the interview, I discovered that Fraud Week debuted in 2000. Back then, it was a national event that was observed at the ACFE’s Annual Fraud Conference & Exhibition. Six years later, the movement went international, and now we have topped another benchmark with more than 700 Official Supporters registered to participate. From the emails we have received from these supporters, many of them are hosting internal trainings and also spreading the word about Fraud Week through both traditional and social media. You can follow Fraud Week on Twitter, and if you are posting about it yourself, please use the hashtag #FraudWeek.

Something else we are doing for Fraud Week this year: we’ve distributed a short survey to CFEs asking them about the impact of fraud during the holidays. What we want to know is: 1) does fraud increase during the holiday shopping season? 2) if yes, why – is it increased financial pressure, a lack of controls, or for other reasons? 3) What types of fraud are we most likely to see during the holidays?

We’ve been asked these questions ourselves, and it became apparent there really isn’t a study out there that addresses these issues. The results have been coming in, and we look forward to sharing them with you this week.

An educated workforce is one of the keys to reducing fraud and abuse all over the world. That’s why it is so reassuring to see so many organizations taking ownership in a movement such as this – being proactive in spreading awareness about the impact of fraud, and its warning signs. The ACFE would like to extend our thanks to all of you who are participating in Fraud Week this year.

Stay tuned tomorrow for a guest blog from LexisNexis' Director of Strategic Alliances, Larry Benson.