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Fraud is a hot topic. What with misuse of cab charge receipts and lax controls around credit card use at some organisations it should be no surprise that the actual incidence and size of major fraud is on the increase.

Stay safe online

National head of KPMG Forensic and one of the authors of the KPMG Fraud Barometer Edition 6, released today, Gary Gill, says people need to be particularly careful when gambling online.

“Were definitely seeing an increase in fraud in the last 12 months or so. Quite a lot of it is driven by online gambling. The access or the ability to gamble online makes it so much easier. It’s just almost like a disease but, at the end of day, it does drive a lot of fraud,” he says.

For individuals, financial scams are mainly about identity theft, so be diligent about safeguards.

“From an investor perspective, it’s investment scams and investors money being stolen. It’s about protecting your identity. Investments scams it is often about something that sounds great but when it sounds too good to be true it often is,” Gill says.

More being lost

Fraudsters have been busy. Large frauds rose in the second half of last year, with over $131 million being lost. The average loss amount was $2.083 million which was up on the $1.815 million of the previous six months.

The majority of frauds over the last four years have occurred in commercial businesses and financial institutions, and just under half of the frauds committed at financial institutions are by customers (49 per cent). A quarter of financial fraud is by organised criminals, 13 per cent by ‘rank and file’ employees and 9 per cent are by managers.

Organised crime at financial institutions usually involves credit card fraud but fortunately most banks have policies in place that reimburse most credit card holders at an individual level.

“The banks are pretty good about that, and customers ultimately don’t have to bear the responsibility,” Gill says.

Sneaky managers

The incidence of fraud by managers might be smaller but the size of the fraud they commit is larger. Frauds committed by managers cost Australia $400 million over four years, at an average value of $2.78 million per fraud. They were also responsible for nine out of the 10 frauds worth over $10 million.

Gill warned that fraud should never be seen as an “unavoidable cost of doing business” and instructed businesses to put the right risk assessments and plans in place to respond to fraud in order to minimise and avoid losses.

“Invariably when it happens against a company you will find there is weakness in controls,” Gill says.

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