How Fraudsters Go After Business

Fraud has a very significant and highly disruptive effect on businesses of all sizes worldwide. Whilst higher profile frauds perpetrated on large organizations hit the headlines, many lower level incidents hit businesses of most sizes all the time unfortunately.

The Association of Fraud Prevention (ACFE) found in its most recent report into worldwide fraud that, on average, organizations were losing some five per cent of their revenue to fraud. The increase in tech has ironically ushered in newer thefts such as cyber fraud although tech has helped combat it such as in the use of systems and physical measures such as tamper proof, secure checks.

Fraud Types

Fraud can range from basic employee ‘time theft’ such as claiming payment for hours not actually worked to major bank account theft – with some frauds remaining undetected over considerable time frames. Others include confidence tricking, such as inveigling employees to reveal passwords to company IT systems and email fraud such as phishing.

Specific fraud methods:


In general, this is based on people claiming for more time than they’ve actually worked; false record keeping using bogus time sheets or others clocking in for absent colleagues are two basic methods.

ID theft

This can cause untold disruption and considerable damage to the reputation of a company falling victim to it.

Sensitive financial information falling into the wrong hands such as bank statements can enable fraudsters access to bank accounts and funds.

Customer information including address and payment details – credit card numbers for example – can enable fraudsters to steal ID and clone cards. This type of fraud can severely break the trust between an organization and its customers.

Payment Card and Cash Fraud

Direct selling environments such as ecommerce, mail order and face to face retail are at risk to card and cash frauds.

Cards – the use of cloned cards is rife and companies are at particular risk if involved in card not present (CNP) transitions over the phone or online.

Vigilant staff properly trained in how to spot fraudulent transactions and software that can detect odd buying trends is one way to help combat card fraud.

Cash – some $70 million in fake currency is estimated to be in circulation in the US, so detecting when it’s in use is key. Not only does a company lose money to the fake cash itself but may lose even more when giving back genuine cash in change.

IT Fraud

With so much by way of financial information, banking and customer records digitized it’s a magnet to sophisticated fraudsters engaging in fast growing cyber crime where they try to access passwords to an organization’s IT system.

This can be achieved by taking advantage of usually human error such as poor password security or general lax email handling. For example, an email persuading the recipient to click a link that may harvest password information, install key logging software or similar enabling the system password to fall into the wrong hands.

Other more long term fraud methods, such as befriending company employees over social media and email in order to gain their trust and divulge sensitive company information, are also commonly deployed.

The Human Factor

While systems security and physical deterrents – such as tamper proof checks as mentioned above – do help, human frailties are often a root cause of fraudsters gaining access where they shouldn’t or getting away with cash and credit card frauds.

For organizations ensuring staff are trained to look out for and spot fraud methods is ever more important.

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