Fraud Prevention Month: The Impact of Fraud

The number of people (and companies) affected by fraud has increased dramatically over the past few years. Fraud results in losses of billions of dollars each year.

Posted by Joe Gerard in Article on March 9th, 2011
The number of people (and companies) affected by fraud has increased dramatically over the past few years. Fraud results in losses of billions of dollars each year. March is Fraud Prevention Month. Fraud Prevention Month is aimed at raising awareness around the importance of preventing and detecting fraud. Fraud schemes and risks change at a rapid pace, and often take a long time to be discovered (or reported). This needs to change. Throughout the month of March many companies will release guidance on preventing workplace fraud and advice for training employees on detecting and reporting fraud. Take a look around and share this information with your employees, so that they too can develop a better understanding of the impact of fraud.

Fraud in the digital age

On March 7th and 8th, a conference called “Preventing Fraud in the Digital Age” was held in Ottawa. The event was put together by government and law enforcement agencies, associations and businesses involved in Canada’s Fraud Prevention Forum. According to the event description on the Chamber website, the following topics were up for discussion at the conference:

  • Current state of fraud
  • Investigating the most at-risk audiences
  • Best practices for preventing and recognizing fraud
  • Implementing fraud prevention ideas

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Fraud and the drug trade

Over the weekend, CBC News Canada published the article “Fraud Costs Nearing Drug Trade, RCMP Say”. According to the RCMP, acts of fraud in Canada are nearing that of the drug trade. We’ve seen similar cases of this in major American cities, such as Miami, where former drug dealers have pulled out of the drug-game and turned to fraud as a means of making money. In the Medical News article “Health care fraud a hot topic on Capitol Hill,” Rep. Cliff Stearns:

“Cited news reports that Medicare fraud is surpassing the drug trade as Florida’s most profitable and efficient criminal enterprise, and he expressed frustration that only estimates—not exact numbers—are available to indicate how much is lost each year to Medicare fraud.”

The CBC article reports that there’s no other crime in Canada that affects more Canadians than fraud does. The losses incurred by both fraud and drug crimes in Canada are roughly the same amount. However, the number of people affected by fraud vastly outweighs the numbers impacted by drug-related crimes.

Fraud prevention and protection

The CBC article focuses mainly on fraud prevention for individuals, but the same lessons can be applied to companies of any size.

Secure your information: Password protection is only the beginning. Don’t write passwords on a post-it note. Employees need to store documents securely, encrypt emails containing sensitive content and only access information that they have permission to view. Don’t open emails from unknown sources or that look spammy. Tighten email controls to block out as much spam as possible.

Do business with fraud-free organizations: When selecting suppliers, vendors and other business partners, do your research and choose wisely. Make sure vendors have sufficient fraud prevention and monitoring mechanisms in place. Ask for referrals and talk to others who do business with them to ensure they are legitimate.

Report fraudulent activity: Whether your company is being defrauded by an employee or someone outside of your company, report it. The ACFE reports that employee tips are the number one source of detecting internal fraud. Reporting fraud as soon as you are aware of it helps to reduce the impact it has on your organization.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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