Fraud 101

What is fraud?

In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation.

What are the different types of fraud?

The main types of fraud includes:

  • Cyber crime – phishing, spoofing, spam emails, malware, spyware & click fraud
  • Identity theft – physical theft of mail, telephone and online ID theft
  • Credit and debit card fraud – stolen cards, skimming and counterfeiting
  • Cheque fraud – stolen cheques, tampering cheques and counterfeiting
  • Mortgage fraud – falsifying information and defaulting on loans
  • Employee fraud – physical theft, misappropriation of funds and false accounting
  • Scams and deceptions – ponzi schemes, pyramid schemes and advanced fee fraud among many others

What is the size of the fraud problem?

The exact size of the fraud problem is impossible to estimate but on a global scale would be trillions of dollars every year.

In 2012, the Annual Fraud Indicator estimated the fraud losses from the UK alone each year totalled £73 billion, from the Private Sector (£45.5bn), Public Sector (£20.3bn), Individuals (£6.1bn) and Not-for-profit (£1.1bn). In a 2003, report by the Australian Institute of Criminology (AIC) and PwC entitled “Serious Fraud in Australia and New Zealand” annual fraud losses were estimated at AUD$5.8bn, which is increasing year on year.

Each year, the Big 4 consulting firms publish their own Global Fraud Survey findings which not only provide estimates into fraud losses but also highlights concerns and fraud trends across 30+ countries by conducting in-depth interviews with key stakeholders.

Understanding the main types of fraud and the actions your organisation can take to protect themselves from the rising costs of fraud, such as developing an effective Fraud Risk Management Framework is essential to counter fraud risks.

Further resources

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