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Along with developments in technology in recent years, identity theft has been on the rise. Fraud statistics have significantly changed in different areas. Examples of identity theft occurring can be data breaching, stolen bank account information, and stolen credit card information.

Data breaches and undermined credit card cases appear in the news more often. With all the instances of data breaches, fraud is the first thing on everyone’s mind! Using Europay, MasterCard, and Visa (EMV) chip cards offer considerable options for making online payments secure and safe. But, EMV chip cards are not reliable when it comes to specialists predicting fraud. These cards are not able to offer security in non-card-present transactions. With the lack of security, these data breaches are sure to continue in the future. Check out America's Best Bookkeepers

Fraud statistics: Data Breaches

The first significant business data breaches started to appear in 2014 and continued into 2015. This threat to data safety and security is still lurking. The majority of the Americans anticipated it to be a short-lived trend.  This belief disappeared as large-scale businesses became the bull’s eye of cybercriminals. In September 2017, a massive data breach occurred at Equifax, the renowned credit bureau. The data breaches have continued to rise, but the advancements in cyber-security have advanced as well.

Fraud Statistics: Identity Theft and Card Fraud

Check out America's Best Bookkeepers During the years of 2012 to 2016 onwards, the FTC’s (Federal Trade Commission) online databank of customer complaints has amassed 13 million grievances in the year 2016 alone; it came up to 3 million. Of those, approximately 13% were linked to identity theft complaints, and about 42% to fraud.

Fraud-related grievances calculated up to be about 1.3 million. Customers stated that they had paid more than $744 million towards those fraud complaints. An average amount of $450 was paid to these companies. 51% of the customers who conveyed a grievance related to fraud also stated the quantity paid.

Around 55% of the grievances related to fraud listed a process of the first contact with the companies. Of those, about 77% were communicated by phone, whereas just 8% were initially communicated by email, and only 3% were reached by mail. Check out America's Best Bookkeepers

How are fraud victims affected

As per the report “Identity Theft: The Aftermath 2016” by The Identity Theft Resource Center, about 20% of the American citizens surveyed were victims of some sort of illegal ID theft in the year 2015. From those, about 9.2% stated that their ID was utilized to perform a financial crime, which ended in a custody permit.

The aftermaths of this illegal ID are astounding. About 55% of victims failed to fulfill their hours from work. Around 44% stated that they lost an employment prospect. Also, roughly 60.7% needed to borrow cash, and 29.5% were obliged to appeal for government aid, such as food stamps or welfare.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

A businesswoman selecting a Fraud business concept on a futuristic portable computer screen.
The ACFE (Association of Certified Fraud Examiners) Global Fraud Study disclosed that a typical business loses an average of 5% of income each year because of fraud. Universally, this translates to deficits of roughly $3.7 trillion, according to anti-fraud experts.

Furthermore, other than lost income, there are also unforeseen costs. For example –  decreased productivity, low employee morale, tarnished brand images and ruined reputations, all resulting from personnel and employer fraud.

Despite such sobering fraud statistics, do not think that it is too late to acquire the latest information and implement proactive methods that avoid, detect, and investigate prospective acts of business fraud. There are facts that you need to be aware of concerning the different types of fraud performed in the workplace. In addition, you also need to learn what can be done to create powerful controls in vulnerable regions of your organization.

Small Businesses Suffer Bigger Monetary Losses

Although both small and large businesses fall victim to fraud, the ACFE discovered that businesses with fewer than 100 employees are most susceptible compared to their superior equivalents. Larger companies are more likely to implement anti-fraud practices, such as internal departmental audits, hotlines, and employee fraud training. In the case of smaller companies, they are less likely to execute similar anti-fraud measures that detect fraud sooner.

Fraud Creating a Monetary Impact on Businesses

According to the ACFE, cyber crime and identity theft (specifically credit card abuse) are among some of the biggest common means of fraud in small-scale businesses. Unfortunately, small companies suffer a bigger financial hit due to unscrupulous behavior in their business.

ACFE’s statistics reveal that thought corruption cases and asset misappropriation causes significant losses to businesses. The most monetary damage with a median of $1 million is due to financial statement fraud.

Another source of trouble for businesses looking to maintain insurance claims and costs is workers’ compensation fraud. The NICB (National Insurance Crime Bureau) has estimated that approximately 25%, or $7.2 billion per annum, is because of workers’ compensation fraud that businesses have to suffer. If a business takes a look at its bookkeeping records, they might be able to calculate the fraud statistics of their business specifically.

Battling Fraud in your Business

Research has shown that fraud is indiscriminate of industry, employer size, or geography. Therefore, it is vital to take active steps to avoid and mitigate the impacts of fraudulent activity.

CFE fraud experts indicate that the implementation of anti-fraud regulations supports to reduce both monetary losses and the duration proceeding from fraud schemes. Decreasing the spell of fraud is essentially critical because the lengthier the fraud lasts, the more financial damage it can cause to a business.

Best Practices for Detecting and Preventing Fraud

Some practices have proven to be particularly successful at detecting and preventing and fraud in businesses:

  1. Instituting an anti-fraud hotline
  2. Implementing a code of conduct and an anti-fraud policy
  3. Establishing fraud training and management review procedures for executives, employees, and managers
  4. Conducting surprise inspections
  5. Directing external inspections of internal controls utilized in financial reporting
  6. Applying systems that actively analyze and monitor company data

Though it’s certainly essential to implement and monitor anti-fraud restriction, not all of the anti-fraud processes are made equal. For example, the ACFE discovered that from the 80% of fraud cases reported, about 42% were identified via hotlines compared to the 3% that were found through external audits.

If you are unsure about which anti-fraud control to use in your business, consult with an anti-fraud consultant, a fraud examiner, or an auditor for advise on the measures that will be effectual for your business.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.