Fraud is Increasing Amid COVID-19 Pandemic

Fraud is Increasing Amid COVID-19 Pandemic – Daniel Schlanger – https://consumerprotection.net/ 

As a result of the COVID-19 pandemic, there has been an increase in a variety of fraud cases according to the Association of Certified Fraud Examiners, the world’s largest anti-fraud organization and provider of anti-fraud training and education. ACFE respondents also reported that the action of preventing, detecting, and investigating fraud has been more difficult and challenging due to the pandemic.

Fraud is affecting an innumerable amount of global business operations, anti-fraud practitioners, business leaders, and the general public as a whole. As of now, those who have been affected by fraud are trying to financially and economically survive during this unprecedented time.

Why Has Fraud Increased During COVID-19?

The ACFE report gave a few reasons why fighting fraud has become more challenging during the Coronavirus outbreak. They predominantly tied this challenge to the physical restrictions that are placed on most individuals due to the pandemic. ACFE surveyed their respondents and asked them about the most complicated part of fighting fraud during this time, and respondents provided reasons such as the inability to travel, issues with conducting remote interviews, and the lack of access to evidence as their top difficulties.

The risk of fraud is progressing more and more each day amidst the COVID-19 pandemic. The ACFE released another report showing statistics that indicate how seventy-seven percent of respondents at ACFE observed an increase in fraud as of August 2020—and ninety-two percent of respondents are expecting an increase in fraud over the next 12 months.

Specifically, there has been significant growth in insurance fraud, loan and bank fraud, financial statement fraud, identity theft, employee embezzlement, and cyber fraud (business email compromise, hacking, ransomware, and malware).

The Unique Issue of Insurance Fraud

Insurance fraud is the embezzlement of transactions made from applicants, policyholders, third-party claimants, and/or professionals. Out of all the types of fraud, insurance fraud is considered more unique because investigators and examiners cannot accurately tell the amount of fraud that occurred and cannot calculate the exact value of the money that was stolen.

The FBI estimates that the total cost of insurance fraud is more than $40 billion per year, which costs the average U.S. family between $400 and $700 per year. During the late 1980s, the Insurance Information Institute interviewed claims adjusters and found that fraud accounted for nearly 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses each year. This means that within a five-year period from 2013 to 2017, property/casualty fraud amounted to nearly $30 billion each year.

This can dramatically fluctuate based on the line of business, economic conditions, and other factors, according to the Insurance Information Institute. Many suspects that are involved in insurance fraud are typically involved in other fraudulent or criminal activity.

The Paycheck Protection Program, a loan for small businesses to overcome the economic collapse due to the pandemic, is attracting fraudulent imposters. The Paycheck Protection Program is extremely imperative for small businesses that need to maintain a specific payroll, rehire employees who may have been laid off, and more. This program was originally worth $350-billion. So far, The Justice Department’s Criminal Division has charged 57 people with Paycheck Protection Program related fraud and suspected around 500 people to be in activity with COVID-19 loan fraud.

Businesses, corporations, and companies are fighting tremendously hard to overcome this economic downfall in addition to fraudulent activity. Since there are plenty of risk factors that are at stake, businesses may be close to pushing the line. It is suggested that these organizations use an updated fraud risk assessment as a starting point, so others can understand and be aware of the risk of fraud during the COVID-19 pandemic. It is also recommended that these organizations use advanced technology with analytical programs to use as a safeguard and/or monitoring system. It is also helpful for companies to stay in touch with any employees who are remote.

Why is Fraud Dramatically Increasing?

Fraud may be increasing due to remote work. Usually, employees are working in the office where a manager or a coworker can oversee them. Since many people are working from home amid the pandemic, it is very possible to obtain personal information from customers such as addresses, social security numbers, and credit card information.

An example of a person who would have full access to your information would be an accountant. To some, accountants may be seen as a significant help or safeguard when dealing with accounting fraud. Susan E. Bos, a member of the Institute of Management Accountants’ Committee on Ethics and deputy treasurer of Washtenaw County, Michigan, believes that accountants hold a responsibility to protect the public. However, there has been a great deal of massive accountant fraud scandals in the last decade where billions of dollars were lost by companies.

Since most employees are dispersed among their homes instead of the office, it is impossible to physically walk by and see somebody who may be involved in fraudulent activities.

However, in this evolving landscape, one of the best ways to defeat fraud is to educate employees on how to actively and effectively prevent, detect, and investigate fraud.

Fraud is Increasing Amid COVID-19 Pandemic – Daniel Schlanger –https://consumerprotection.net/