What does a fraudster look like? | Profile of Fraud


Who does fraud?

I recently read an article on ACFE Insights that talked about the profile of a fraudster. It came with lots of interesting statistics.

What does a fraudster look like | fraudIt talked about how performance, processing, reporting and analyzing of data involved humans. And naturally humans make mistakes, have lapses in judgement, and sometimes break the rules. Many organizations have the mindset of "pfft, that could never happen here". But organizations are made up of humans (we're funny creatures) and in those organizations, it's people who deal with processes, financial transactions, numbers, and data.

So what leads people to succumb to pressure, opportunity, and rationalization to commit fraud? It's critical that organizations protect themselves from dishonest employees.

What do these fraudulent humans look like? Well like anyone else. You know them as the people you work with, your friends, family members, acquaintances. Outwardly they may appear honest and ethical, which makes it hard to suspect (or believe for that matter) that they could possibly commit such an action. But that's what fraud prevention is all about. 

The ACFE's 2014 Report to the Nations, covering Occupational Fraud and Abuse, gives insight into what a fraudster looks like. The ACFE studied 1483 occupational fraud cases. The following statistics are pulled from the ACFE Insight's article:

  • 42% were staff-level employees, and 36% were mid-level managers.
  • 55% worked alone in committing their scheme
  • 52% were between the ages of 31 and 45
  • Two-thirds were male
  • 47% had worked for the victim organization for less than six years.
  • 72% had at least some university education
  • 45% worked in the accounting, primary operations, or sales functions of the victim organization
  • 87% were first-time offenders with no criminal history of fraudulent behavior
  • 44% were known to be living beyond their means

Does that mean that the co-worker sitting next to you who seemingly falls under all these points is going to commit fraud? And does that mean that your best friend, who you've known since grade school, who does not fit into any of these points, will never commit fraud? What organizations can do with this data is use it to provide context and awareness into those who might fit into these higher risk areas.Fraud perpetrators don't wear masks

Because of this, the ACFE created a handy infographic that "illustrates the statistical profile of a fraudster to help inform anti-fraud professionals, management and the general public about some of the findings regarding occupational fraud perpetrators." 

This profile can be a valuable training and awareness tool in seeking out a possible fraudster. Fraud perpetrators don't have a fraud sign pinned to their backs. They don't have "fraud" stamped to their foreheads. They're not wearing a mask. So the more organizations can educate themselves about what the human side of fraud looks like, they are better equipped in preventing it.

So what happens is an employee suspects their co-worker of a fraudulent activity? While you may already be taking steps to protect yourself and your employees from fraud, backing it up with an independent ethics reporting system makes you that much safer.


Topics:  Corporate Counsel, Employer Liability Issues, Fraud

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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