- A typical scam, measured from the time the activity began until it was discovered by the victim, is around 18 months in duration.
- In the corporate setting, many of those convicted of fraud are first time offenders with relatively uneventful employment histories. In fact, 87% of the thieves had never been charged with a crime involving fraud and 84% had never been punished by an employer for such activity.
- In most cases, 92%, the fraudster was exhibiting behavioral signs of fraudulent activity in the months leading up to detection. Red flags include living beyond their means and having inappropriate business relationships with vendors or customers. Business owners and managers should be aware of the behavioral signs that may indicate fraud in order to prevent it.
- On an annual basis, 5% of corporate revenues are lost due to fraudulent activity. The median loss for companies is $145,000, while 22% of cases involved losses of $1 million or more.
- Corruption scams are on the rise, as they comprised 33.4% of all fraud in 2012 and 36.8% in the 2014 ACFE report. These schemes have a higher price tag than other forms of fraud, at $200,000 on average. Some other monetary amounts of note are:
- Among companies with less than 100 workers, almost one-third experience losses due to fraud, at an average of $154,000.
- Larger businesses, with 100 or more employees, lose less due to unlawful activity. Just over 23% of these companies suffer losses, on average $128,000. The reason is tied to anti-fraud protections. Larger enterprises tend to invest in anti-fraud controls, which serve as a deterrent to crime due to the fact that employees are aware of the measures.
- Companies that have implemented anti-fraud controls had a significant impact on financial fraud statistics. These organizations reduced their financial losses due to fraud and experienced crimes that where shorter in duration, i.e., the activity was discovered faster as compared to businesses with no anti-fraud controls in place.
- Over three-quarters of fraud cases involving corporations were committed by employees in one of seven divisions: Accounting, Customer service, Operations, Sales, Executives/C-Suite, Purchasing, and/or Finance.
These financial fraud statistics may come as a surprise to many, but it’s important to be aware of these types of crimes in order to avoid becoming a victim. While the most powerful anti-fraud controls won’t necessarily prevent fraud, vigilance and proper precautions can certainly help. For more information on what you can do to protect yourself or your business, consult with your forensic accountant on anti-fraud measures.
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Veriti Consulting offers certified fraud examination services to businesses and individuals across the United States. If you have questions or concerns about fraud call 855-232-4410 or send your questions via email.
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- The Ultimate Financial Fraud Examination & Prevention Checklist