How To Detect Fraud

Due to the serious repercussions that can follow fraudulent activity, such as financial loss and reputational damage, it is important that you detect fraud as soon as it has occurred. There are many different forms which fraud can take, and we are required to be vigilant of all of these forms. There are safeguards which can be implemented into businesses to flag when fraud has been attempted or has occurred. Fraud awareness training is essential if an individual wants to detect fraud effectively.

What is Fraud?

Fraud is a conscious, illegal activity with the purpose of deceiving another individual or organisation in order to create a financial gain for the perpetrator. Fraudulent activity can be prevalent in the business world, as fraudsters attempt to deceive others to benefit their own jobs or their respective organisations. The sectors within the business world which experience fraudulent offences most commonly are:

Insurance
Finance
Real Estate
Investment
Even as an individual at home, you are also vulnerable to fraud. Fraudsters can victimise individuals through:
Identity Fraud
Credit Card Fraud
Benefit Fraud

Therefore, considering that individuals and companies at large are all vulnerable to the activity of fraudsters, it is essential that we decide what the red flags are to detect fraud before it is too late.

What are the red flags which can be used to detect fraud within an organisation?

There are some specific signs which can be used to detect fraud, but overall a simple change in behaviour which seems suspicious can be a red flag to detect fraud.

1) Accounts. Analyse the changes within your accounts. Can the changes be justified by employees or is there something suspicious about the fluctuations?

2) Documentation. If documents are going missing regularly or if there is some evidence of tampering with a document, such as the alteration of figures, this can indicate that an employee has a vested interest in altering the data in this document, perhaps for fraud.

3) Company purchases. If excessive purchases seem to be occurring, especially to new suppliers that the organisation hasn’t dealt with regularly before, it could indicate that an employee is exercising fraud through company payments.

4) Inventories. Fraud can take place through altering inventories. If there seems to be a drastic loss of inventories, this can indicate that some doctoring has occurred.

5) Invoices. The number of invoices processed by a company does fluctuate; however, if there are extreme changes in the volume of invoices then it suggests that the individual responsible may be altering the invoices to cover fraud.

What are the red flags which can be used to detect fraud at home?

As an individual you can become a victim of fraud due to fraudsters gaining access to your personal and financial information in a variety of ways. This can be daunting and therefore it is important to be aware of the signs which allow you to detect fraud.

1) Watch your accounts. Make sure that you analyse the changes in your accounts. Has there been a financial transaction which you don’t remember authorising yourself? If so, contact your bank to find out the details of this transaction.

2) Keep an eye on accounts opened in your name. Has there been a financial or online account opened in your name which you did not open yourself? If so this is a sign that a fraudster has gained enough of your personal information to create an account in your name.

3) Notifications regarding changes to your accounts, such as password changes. If you are contacted regarding a password change for one of your accounts which you did not create, it suggests that a fraudster has conducted this change.

The premise of detecting fraud rests upon the fact that as individuals and as organisations, we all need to be vigilant. If something seems to be suspicious, always investigate it, just to be sure. Fraud awareness training will also help organisations to collectively identify and detect fraud before it is too late.

How are you managing your GDPR compliance requirements?

GDPR added a significant compliance burden on DPOs and data processors. Data breaches must be reported to the authorities within 72 hours, each new data processing activity needs to be documented and Data Protection Impact Assessments (DPIA) must be carried out for processing that is likely to result in a high risk to individuals. Penalties for breaching GDPR can reach into the tens of millions of Euros.

“In a world older and more complete than ours they move finished and complete, gifted with extensions of the senses we have lost or never attained, living by voices we shall never hear.”