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.
Christopher M. Russo recently served as the Republican chief economist for the U.S. Congress Joint Economic Committee. He previously held positions with the U.S. Senate Banking Committee, Federal Reserve Bank of New York and Federal Reserve Bank of Chicago. He holds a master's degree in financial mathematics from the University of Chicago and is currently completing his doctoral dissertation in economics at George Mason University.
Laura Drabik is a frequent commentator on issues of transformation and innovation in the P&C insurance industry and Chief Evangelist at Guidewire. Drabik also oversees the Guidewire Insurtech Vanguard program, which helps insurers learn about the hottest new insurtechs and how to leverage their capabilities quickly and efficiently. She is also the author of Drabik Digest and the host of the InsurTalk podcast.
Michael Giusti, M.B.A., is an analyst at insuranceQuotes.com, which publishes in-depth studies, data and analysis related to auto, home, health, life and business insurance. In his role as analyst, Michael studies the insurance industry in order to provide trusted tips, advice and insights. He has worked as a journalist for more than 20 years, including as a reporter at a daily newspaper in Florida, as an editor at a regional business journal, and as a writer for national and international publications. Michael is based out of New Orleans.
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.
