Definition of Fraud:
Any illegal act characterized by deceit, concealment, or violation of trust. These acts are not dependent upon the threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money, property, or services; to avoid payment or loss of services; or to secure personal or business advantage.
Who are the victims:
All organizations are subject to fraud risks. Good governance principles demand that an organization’s board of directors, or equivalent oversight body, ensure overall high ethical behavior in the organization, regardless of its status as public, private, government, or not-for-profit; its relative size; or its industry. The board’s role is critically important because historically most major frauds are perpetrated by senior management in collusion with other employees. Vigilant handling of fraud cases within an organization sends clear signals to the public, stakeholders, and regulators about the board and management’s attitude toward fraud risks and about the organization’s fraud risk tolerance. In addition to the board, personnel at all levels of the organization — including every level of management, staff, and internal auditors, as well as the organization’s external auditors — have responsibility for dealing with fraud risk. Particularly, they are expected to explain how the organization is responding to heightened regulations, as well as public and stakeholder scrutiny; what form of fraud risk management program the organization has in place; how it identifies fraud risks; what it is doing to better prevent fraud, or at least detect it sooner; and what process is in place to investigate fraud and take corrective action.
Internal fraud, also called occupational fraud, can be defined as: “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the organization’s resources or assets.” Simply stated, this type of fraud occurs when an employee, manager, or executive commits fraud against his or her employer.
External fraud against [an organization] … covers a broad range of schemes. Dishonest vendors might engage in bid-rigging schemes, bill the company for goods or services not provided, or demand bribes from employees. Likewise, dishonest customers might submit bad checks or falsified account information for payment, or might attempt to return stolen or knock-off products for a refund. In addition, organizations also face threats of security breaches and thefts of intellectual property perpetrated by unknown third parties. Other examples of frauds committed by external third-parties include hacking, theft of proprietary information, tax fraud, bankruptcy fraud, insurance fraud, healthcare fraud, and loan fraud.
In a Nutshell:
Fraud occurs all around us, and by its very nature of concealment, is very difficult to detect at the onset. Over time a perpetrator’s actions can become more transparent through attention to trends, KPI’s and financial variations, the growing size of the fraud, and behaviors.
Some fraudulent schemes start out small and grow over time to either cover past tracks through layering and/or the growing appetite and comfort of the perpetrator[s]. Other schemes remain small and level over a very long time but the accumulation of individual losses can become significant.
Collusion is two or more individuals coordinating a fraudulent scheme and is more difficult to detect.
The responsibility for establishing and maintaining control over fraud rests with University administration. Internal audit functions are not responsible for detecting fraud, but are responsible to consider fraud risk and University administration’s controls over fraud.
What do Fraud investigators do:
Fraud investigators review allegations of credit card and insurance fraud cases to determine whether individuals or organizations have attempted deception for financial benefit. The type of investigations may vary depending on the industry and field. Fraud investigators may work for organizations such as financial institutions, insurance companies, private investigation firms, criminal justice, government agencies and other organizations. Some of the basic job duties of a fraud investigator are:
- Creating and implementing preventive systems to limit frauds
- Interacting with banks, law enforcement and vendors to observe fraudulent activities and validate information
- Identifying possible threats to a company, such as infringement, security lapses and incidents of fraud
- Developing fraud analysis models to improve the efficiency of a company’s systems
- Documenting all processes of investigation
- Interviewing potential suspects to determine fault
- Latest fraud statistics 2023 in South Africa
- South Africa recorded a 600% increase in fraud cases between 2018 and 2022.
- According to statistics from the Southern African Fraud Prevention Service (SAFPS), there was a 600% increase in incidents of fraud reported by their members in 2022 when compared to 2018.
- In order to tackle this growing problem of fraud, the SAFPS has launched a fraud prevention protocol called Yima, which seeks to educate the broader public who may be susceptible to fraudsters.
- In response to the growing need for a proactive approach to fraud prevention, the SAFPS is developing a product called Yima. Once launched, the product’s website will be a one-stop-shop for South Africans to report scams, secure their identity, and scan any website for vulnerabilities related to scams. They will also be able to educate themselves on identifying a scam,” says Karrim in a statement. “These tools will enable consumers to surf the net more confidently and go about their daily lives aware and informed. These are just some exciting elements South Africans can access through the site.”
- The main element of the website will be the ability to report a scam incident or any suspicious activity to the SAFPS. This suspicious activity includes a fake or suspect-looking online shopping website/portal and instances where the user has received phoney banking information.
- These reports will be collated and shared with law enforcement for investigation. Users will also be provided with a scams hotline to report a fraud incident directly to their banks, retailers or insurance companies via a single number. Users will only need to remember one number rather than search for each institution’s contact numbers online.
- Additionally, Yima users will have access to the consumer products and services offered by the SAFPS.
- On top of the meteoric rise in fraud cases, in a report last month, INTERPOL also gave South Africa the unwanted title of the cybercrime hub of Africa, with the country recording over 230 million incidents.
- If you suspect fraud, contact us today on 082 215 7674 or johan@simplysolitude.com
