Fraudulent Schemes Last Longer, Cause More Financial Damage Than Expected

A recent report from [Organization] reveals that fraudulent schemes can persist for longer periods than previously thought and cause more significant financial damage. The study examined the duration and impact of various types of fraud and identified key factors contributing to their occurrence.

Duration of Fraudulent Schemes

According to the report, certain types of fraud tend to have a greater velocity, or amount lost per month. Specifically:

Billing, check and payment tampering, expense reimbursement schemes, financial statement fraud, payroll, and skimming schemes typically lasted 18 months before detection.
Schemes involving the theft of noncash assets, cash on hand, and cash larceny had the shortest median duration at 12 months.

Factors Contributing to Fraudulent Schemes During the COVID-19 Pandemic

The study found that certain factors contributed to the occurrence of fraudulent schemes during the pandemic. Specifically:

The majority of cases reported to [Organization] between January 2022 and September 2023 likely occurred during the height of the pandemic.
Pandemic-related factors contributed to the occurrence of fraudulent schemes in 53% of cases reported to [Organization].

Impact of Fraudulent Schemes

The report highlights that:

The median loss of frauds that occurred during the pandemic increased by 24%, even while the time to detection did not change.
Cases involving collusion between two or more perpetrators and those perpetrated by individuals at higher levels of authority have higher velocities and inflict financial damage to the victim more quickly.
Schemes with longer durations tend to cause greater financial losses.

Key Findings

Certain types of fraud, such as financial statement fraud and corruption, have the greatest velocities.
Billing, check and payment tampering, expense reimbursement schemes, financial statement fraud, payroll, and skimming schemes typically lasted 18 months before detection.
Schemes involving the theft of noncash assets, cash on hand, and cash larceny had the shortest median duration at 12 months.
Pandemic-related factors contributed to the occurrence of fraudulent schemes in 53% of cases reported to [Organization].
The median loss of frauds that occurred during the pandemic increased by 24%, even while the time to detection did not change.

Recommendations

To mitigate financial losses and prevent fraudulent schemes, organizations should:

Prioritize implementing measures that demonstrate a commitment to fraud prevention and detection.
Provide regular training on fraudulent schemes and how to prevent them for employees, managers, and executives.
Regularly review and update internal controls to ensure they are effective in preventing fraud.
Consider conducting regular audits and risk assessments to identify potential vulnerabilities.

By understanding the trends and patterns of fraudulent schemes, organizations can take proactive steps to prevent and detect these types of crimes, ultimately reducing financial losses and protecting their reputation.