Fraud is continuing to increase this year, in part due to the COVID-19 pandemic, according to a new survey by the Association of Certified Fraud Examiners.
The report found that 79 percent of anti-fraud professionals have seen an increase in the overall level of fraud as of November, compared to 77 percent in August and 68 percent in May. Thirty-eight percent of the respondents said in November the increase has been significant, compared to 34 percent in August and 25 percent in May.
Laird Nossuli is CEO of iEmergent, a provider of mortgage lending forecasts and analytics to the lending, housing and real estate industries.
Maxfield Marquardt is senior counsel and director of regulatory affairs at Trusaic.
Nikolai J. Sklaroff has spent more than 28 years in the public finance industry, as a generalist with special expertise in credit engineering difficult and unusual financings. During his public finance career, he has served as an investment banker for 17 years as well as a senior rating analyst and a financial advisor. He joined Wells Fargo Securities as the senior general infrastructure investment banker in San Francisco in 2011. He has also worked as a senior investment banker with Citigroup Global Markets (originally Smith Barney) and J. P. Morgan Securities. Prior to becoming an investment banker in 1997, Nikolai was a senior Moody's Investors Service rating agency analyst and member of Moody's rating committee for eight years. Nikolai began his career as a financial advisor with Public Financial Management, Inc. in his hometown Philadelphia. A frequent speaker at industry conferences he has also served on multiple boards and advisory committees.
Cyber fraud, payment fraud (such as schemes with debit and credit cards) and identity theft are the three top fraud schemes seeing increases, according to anti-fraud professionals.
The largest increase in observed fraud was in financial statement fraud, with 7 percent more anti-fraud professionals reported seeing financial statement fraud in November, compared to August. That could be because as companies continue to see their profits drop, they feel more pressure to cook the books.
The survey also found 77 percent of anti-fraud professionals report that investigating and preventing fraud is more challenging now, while 71 percent said detecting fraud is more challenging as a result of the pandemic.
ACFE members anticipate the fraud trend will continue, even as vaccines have begun rolling out this week in the U.S. Ninety percent of the survey respondents expect a further increase in the level of fraud over the next 12 months, with 44 percent predicting the change is likely to be significant.
Nearly half (48 percent) of the organizations polled expect to increase their investments in anti-fraud technology, and 38 percent intend to raise the use of fraud-related consultants or other external resources. Budgets for anti-fraud training and professional development are experiencing a similar increase (according to 37 percent of the organizations polled), but nearly one-quarter (24 percent) anticipate a decrease in this area. The budget component most likely to see decreases is travel for anti-fraud staff, which shouldn’t be surprising given the plunging levels of air travel in general over this past year, with 38 percent of the survey respondents expecting a reduction in funds for travel in the year ahead.
