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Staff Fraudscape

by msecadm4921

Staff Fraudscape is a 28-page report analysing the insider frauds recorded by Members of the CIFAS Staff Fraud Database during 2010.

Despite a very small decrease in the overall level of staff fraud recorded in 2010, the outlook is far from rosy because:

a 63% increase in instances of staff stealing or disclosing personal data was recorded in 2010 compared with 2009, demonstrating the increasing awareness of the value of personal data to criminals.
a stark age differential crystallised in 2010: with 29% of staff fraudsters aged under 21 being guilty of data-related staff frauds, compared with only 3% aged 41- 50 and not a single instance of any fraudster aged over 50 committing such frauds. In addition, the overall profile of staff fraudsters changed in 2010 – with younger people committing more fraud than ever before.
more established members of staff are committing frauds. The average duration of employment before fraud was discovered increased from 4.3 years in 2009 to 5.5 years in 2010.
the economic uncertainty of recent years, combined with an ever more competitive job market, means that more and more people are attempting to gain employment fraudulently. Conversely, a 70% increase in unsuccessful employment application frauds indicates that organisations are increasingly checking job applications for fraud before the post is offered to the successful candidate.
efforts to promote an awareness of fraud amongst employees has resulted in a 12% increase in cases being reported by staff in 2010, compared with 2009 levels.
Not involving police makes data sharing imperative

As fraud techniques and fraudster characteristics change, so must the techniques used by organisations to prevent fraud, and to deal with it once it has been identified.

The concept of fraud being carried out by a trusted peer, colleague or friend is an uncomfortable one that many organisations do not like to acknowledge. Members of the CIFAS Staff Fraud Database share data on confirmed cases of staff fraud in order to prevent such fraudsters from moving, unchallenged, to another organisation and attempting to commit further fraud. Data sharing on such frauds is a vital step in preventing fraudsters from continuing unimpeded; especially when only 27% of staff fraudsters were reported to the police in 2010.

CIFAS Staff Fraud Adviser, Arjun Medhi, says: “Much attention is given to the dangers posed to organisations by criminal gangs operating in the world of cyber hacking, or by customers applying fraudulently for products and services. The dangers of staff fraud, however, are just as real; both financially and in terms of reputation. This reputational risk may explain the reluctance to report cases to the police, but without additional steps such as enhanced vetting procedures and data sharing, internal fraudsters will simply be able to move on and deceive their way into new positions.”

The danger of youth

The revelation that fraudsters aged under 21 are the most likely to be guilty of data theft related frauds, and that there has been a visible increase in all frauds committed by the youngest age ranges demonstrates a particular set of pressures facing the youngest members of the workforce.

CIFAS Communications Manager, Richard Hurley, says: “In terms of rising youth unemployment, economic outlook, and job instability it is – perhaps – one of the most difficult times to be entering employment. Rising living costs and spiralling debts can place further stresses upon the young above and beyond those facing us all. As a result, it is not difficult to see how some young employees turn to frauds such as stealing data. After all, they are possibly the most aware of the value of data, and technically the most proficient, having grown up in an increasingly digital world.

“However, this kind of vulnerability is also preyed upon; with organised criminal gangs often targeting those with clean employment histories and fraught personal circumstances. These factors go some way to explain the rise in the number of young staff fraudsters – demonstrating the particular dangers surrounding and targeting the youngest members of the workforce.”

Prevention

Arjun Medhi adds: “While the vast majority of staff are honest and trustworthy, staff fraud is a real problem that poses real and continuing risks. It can be caused by a whole range of factors. What Staff Fraudscape lays bare is the intricate complexities involved in battling fraud, balancing preventative measures against the need to treat innocent staff fairly, and the continuing evolution in the types of fraud being committed today.

The fight against fraud requires similar and continual evolution of methods, and the recognition that through means such as data-sharing and instilling an anti-fraud culture throughout an organisation, prevention can be made the top priority, rather than learning how to deal with the consequences once the damage has been done.”

Notes:

CIFAS is the UK’s Fraud Prevention Service with over 250 Member organisations spread across banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring and share dealing and the public sector. Members share information on identified frauds.

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