Profile of a Fraudster

Fraud is a persistent threat that severely impacts the financial performance of an enterprise. When it is discovered a trusted employee, staff member, or executive has been stealing money, products, or services, it can have a lasting effect. This can manifest in the form of damage to the brand, or worse yet, adversely impact employee trust. For this reason, many companies in Atlanta and across Georgia regularly update fraud prevention programs. To help with this task, the Association of Certified Fraud Examiners (ACFE) published the 2020 Report to Nations – Global Study on Occupational Fraud. The report has outlined the work and personal life behaviors that are commonly exhibited by fraudsters. In fact, it was found that in 62% of cases the perpetrator was living beyond their means while 15% exhibited serious control issues. This data is especially useful in helping companies understand the profile of a fraudster. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

Report Methodology

The report is based on the results of the 2019 Global Fraud Survey conducted online open to Certified Fraud Examiners from July to September 2019. Respondents were required to submit detailed information on the perpetrator, victim organization, and the methods of fraud. The primary occupation of respondents included fraud investigators, internal auditors, finance professionals, law enforcement, ethics professionals, risk control, and IT forensic specialists.

Key Report Findings

• Work-Related Red Flag Behaviors – There is a common pattern of work-related behavior that often indicates fraud may be occurring. It was found that in 19% of cases there was an unusually close association with vendors, 15% exhibited control issues (unwillingness to share duties), 13% irritability and defensiveness, 13% wheeler-dealer attitude, 8% complained about inadequate pay, 7% refused to take vacations, and 6% complained about a lack of authority.
• Personal Life Red Flag Behavior – There are also personal life red flag situations or behaviors which presented in 63% of the cases. It was found that 62% of fraudsters were living beyond their means, 26% experienced financial difficulties, 12% divorce or family problems, 9% addiction issues, 6% social isolation, 5% past legal problems, and 4% had instability in life circumstances.
• Prior Fraud Disciplinary Action – There was interest in identifying the number of cases where the fraudster had previously received disciplinary action for fraud-related activities. It was found that 86% of perpetrators had never been punished or terminated, 8% had been previously terminated and 8% had been previously punished.
• Common Non-Fraud Misconduct – The report also investigated whether fraudsters exhibited other non-fraud-related behaviors on the job. It was found that in just under half of the cases that misconduct had been reported ranging from bullying to sexual harassment. The details reveal that 20% were reported for bullying or intimidation, 13% excessive absenteeism, 12% excessive tardiness, 8% excessive internet browsing, and 3% were reported for sexual harassment.
• Common HR Related Issues – There was also interest in understanding whether negative HR issues arose prior to or during the fraud. It was found that in 42% of cases there were one or more negative issues reported. The details reveal that 13% had received poor performance evaluations, 12% fear of job loss, 10% were denied a raise or promotion, 6% actual job loss, 4% cut in pay or benefits and 2% received a demotion. These issues may represent a triggering event that motivates an employee to engage in fraud.
• Education Level- Beyond behavioral clues and disciplinary history, the report wanted to understand the education level of most fraudsters. It was discovered that in 62% of occupational fraud cases the perpetrator had a university degree. In addition, age played a role in the total loss experienced by a company. For a fraudster less than 40 years old the average loss was $40,000, between 41-54 years old $150,000, and over 55 years old $425,000. It is apparent the higher the level of education and professional experience of a fraudster the greater the potential for loss.

Contact Us

While there is no single profile that fits all fraudsters there are common characteristics that indicate the potential for fraud is elevated. Atlanta businesses can use this information when designing or updating fraud prevention programs to enhance effectiveness. If you have questions about the information outlined above or need assistance with a suspected issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.