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.
The findings reveal that, even for digital-first homebuyers (people who prefer using digital tools when shopping), it's critical for lenders to balance technology with the appropriate degree of personalization and human interaction.
Brad Saft is an award-winning entrepreneur, writer, investor and founder of DonorAdvisedFunds.com.
He has founded several companies including eSpired, an education technology company focused on at-home learning, where he serves as CEO. He is actively involved with a variety of nonprofits, serving on the board of Kids Need Our Love aimed at combating child abuse.
Jason Kaminsky is the CEO and co-founder of kWh Analytics. Just prior to joining kWh Analytics, Jason spent more than three years as a vice president of environmental finance at Wells Fargo Bank. As a senior member of the Wells Fargo deal team, Kaminsky originated, underwrote, and financed tax-equity investments during a time when the bank added nearly $1bn of solar assets. Prior to joining Wells Fargo in 2011, he worked at SPG Solar, where he supported the CEO on strategic corporate initiatives.
Kaminsky received both his B.S. in Mathematics and his B.S. in Atmospheric, Oceanic, and Environmental Sciences from UCLA. He holds an M.S. degree in Environment and Resources from Stanford University, and also completed his M.B.A. at the Stanford Graduate School of Business. He is from Thousand Oaks, California.
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.
