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.
Richard L. Chen is the founder of and lead counsel at Brightstar Law Group, a law firm specializing in providing RIA compliance consulting and corporate law services to wealth managers, financial planners, family offices and private fund sponsors.
Before launching his practice, Chen spent many years at several preeminent law firms in New York including Simpson Thacher & Bartlett; K&L Gates; Schulte Roth & Zabel; and Arnold & Porter.
Atul Tandon serves as CEO of Opportunity International, a Chicago-based international NGO that designs, delivers and scales innovative financial solutions to help families living in poverty build sustainable livelihoods. The NGO reached over 18 million people last year, supporting individuals and families experiencing extreme poverty in Sub-Saharan Africa, Asia, as well as Central and South America. As a global executive for Citibank, Tandon pioneered personal banking solutions in India and grew Citi's global consumer networks to more than 146 million accounts with a presence in over 100 countries.
Rafael Bernard, CFP, MSFP, is an alumnus of Kansas State's financial therapy program and Bentley University's financial planning program.
He has experience researching financial literacy, designing financial therapy-driven client activities, and leveraging experiential learning to build financial wellness curricula.
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.
