Financial pressures from a weak global economy is leading to a rise in fraud, identity theft, and other crimes. The Association of Certified Fraud Examiners (ACFE) published a survey earlier this year which reported that more than half of CFEs (55.4 percent) have seen a rise in fraudulent activity in the preceding 12 months compared to the prior year.
The trend is causing organizations and individuals to seek out international investigators as a means to boost security, assurance, and internal controls. In ACFE’s survey, 49.1 percent of respondents “cited increased financial pressure as the biggest factor contributing to the increase in fraud.”
The digital age and social media have made identity theft more prevalent. Perpetrators often obtain sensitive information through public networks and social sites.
“We're seeing a significant increase in identity theft cases that result from individuals sharing too much information online,” says Tom Burnett, a spokesman for Wymoo International, a global security firm which conducts background checks and investigations on behalf of clients. “In most cases, the crime could be prevented had the victim been more cautious about what information can be found in the public domain and the Internet.”
Background Check Investigation
Aside from readily available information about an individual in the public domain, such as Facebook or some government websites, Internet criminals are also creating fake companies and phony sites to lure users into providing sensitive information.
“Online criminals are also producing high quality websites, registering false company, creating fake profiles, and so on,” says Burnett. “Much of the information on the internet is false, so it's becoming more difficult to determine who is real and who is a criminal.”
Company Verification and Online Dating Check
Thus, professional private investigation firms are playing a bigger role in lowering the risk for organizations and individuals. Such firms verify the backgrounds of people and companies. Such firms also test the accuracy of claims given by outside parties.
For instance, company verification services helps to ascertain that a prospective organization is a real company instead of a dummy business created solely for the perpetration of fraud. At the individual level, an online dating check seeks to ensure that a complete stranger met through dating or social sites is who he or she claims to be and not a criminal.
Employees Pose Internal Risks
“Desperate people do desperate things,” said ACFE President James D. Ratley, CFE. “Loyal employees have bills to pay and families to feed. In a good economy, they would never think of committing fraud against their employers. But especially now, organizations must be vigilant during these turbulent times by ensuring proper fraud prevention procedures are in place.”
Here are other findings from a survey of more than 500 randomly-selected Certified Fraud Examiners:
- Employees pose the greatest fraud threat in the current economy. About 48 percent of CFEs indicated that embezzlement was on the rise.
- Layoffs are affecting organizations' internal control systems. Nearly 60 percent of CFEs who work as in-house fraud examiners reported that their companies had experienced layoffs during the past year. Among those who had experienced layoffs, almost 35 percent said their company had eliminated some controls.
- Fraud levels are expected to continue rising. Almost 90 percent of respondents said they expect fraud to continue to increase during the next 12 months.