Numbers on a colorful background

Benford’s Law is a long-standing statistical precept that remains as relevant in fighting fraud as ever. The premise is that, in sets of random data, multidigit numbers beginning with 1, 2 or 3 are more likely to occur than those starting with 4 through 9. But crooks don’t necessarily know this. When manipulating financial data, […]

OOPS text on the colorful buttons of the keyboard.

The Web has opened plenty of new avenues for criminal behavior. For example, you may have heard of cybersquatting. Someone registers a site’s domain name that includes a trademark and then tries to profit by selling that name to the trademark owner. But are you familiar with typosquatting? You should be — because these schemes […]

An acrimonious divorce, ownership dispute or occupational theft incident could all lead an individual or business to wrongfully hide items of value. In such cases, fraud experts use a variety of tools to uncover the assets, starting with net worth analysis. This looks at changes in a person’s worth, reconciling those changes with income and […]

Many not-for-profits increase their occupational theft risk by devoting too little of their budget to internal controls, placing excessive trust in staffers and volunteers and failing to punish fraud perpetrators appropriately. Board members who lack the financial knowledge to spot irregularities are another risk. Because your organization likely can’t afford any fraud losses, you need […]

Fraud experts have long suggested that the presence of three conditions (pressure, rationalization and opportunity) greatly increases the likelihood that an employee will commit fraud. This is known as the “fraud triangle.” Over the years, the original triangle framework has been expanded to add capability (generally fraud-prone personality characteristics) to define a “fraud diamond.” Other […]

According to the Association of Certified Fraud Examiners, active detection methods (such as surprise audits or data monitoring) are far more effective than passive methods (such as confessions or notification by police). To reduce the duration of any fraud scheme and lower overall financial losses, companies should use such active detection methods as IT controls, […]

Although “pump-and-dump” fraud perpetrators mostly target inexperienced investors, anyone can fall for this scheme. Typically, a scammer buys shares in a relatively illiquid stock, then hypes it with false or misleading claims to potential investors (usually via phone or email). This drives up the price. When the stock hits a certain level, the fraudster sells, […]

Improper revenue recognition has long accounted for a substantial portion of financial statement fraud. By recording revenue early, a dishonest business seller or an employee under pressure to meet financial benchmarks can significantly distort profits. Fortunately, such manipulation leaves traces for fraud experts to find. Probably the most obvious marker is when a company records […]

  As more people use mobile phones, more fraud perpetrators target these devices. According to Javelin Strategy & Research, between 2017 and 2018 the number of fraudulent mobile-phone accounts opened grew by 78%. Schemes in which thieves open a phone account in your name and use it to access your bank account, sign up for […]

Privately held businesses aren’t required to conduct fraud risk assessments, but you should do so anyway. In general, there are four ways employees might exploit your system: Fraudulent financial reporting, misappropriation of assets, improper expenditures and illicitly obtained revenue and assets. To prevent these schemes, interview executives and managers to ensure they’re setting the right […]