According to the study conducted by the UK’s Fraud Prevention Service, there has been a 52% overall increase in the number of insider frauds recorded since 2011.
The “precarious economic and employment conditions” at present are demonstrated by the 24% increase in dishonest actions by staff to gain a benefit, with fraudulent attempts to gain employment more than doubling on last year.
There has also been a 53% surge in theft of customer data by employees.
The dangers posed to an organisation by its own staff are often not as readily acknowledged when compared with the threat of fraud committed by an outsider. The 52% spike in recorded instances of staff fraud, therefore, sends a clear warning to organisations.
CIFAS’ communications manager Richard Hurley said: “Organisations have invested much time and effort in putting controls in place to counter the threat of insider fraud, and these figures demonstrate that this investment is paying off; with more fraud being uncovered.”
Hurley added: “CIFAS has long campaigned for better awareness of the danger of staff fraud and, with more being detected, a clear warning is delivered. Put simply, without investment in procedures and counter fraud measures undetected staff fraud will damage your organisation.”
Economic and employment worries play a part
As economic and employment problems persist for many, increases in fraud where staff either try to steal from their employer or its customers or try to defraud their way into employment are not especially surprising.
The dangers that these increases signal, however, should not be ignored.
Arjun Medhi, CIFAS staff fraud adviser, commented: “As people feel the pinch, organisations must be aware that staff are working harder than ever, often for smaller rewards; going without recognition or adequate recompense. This can create resentment, and some people will eventually resort to fraud out of a sense of entitlement or misguidedly perceiving no other way to support themselves. If organisations do not keep an eye out for these signs, or indications of staff in financial trouble, then they’re leaving the door wide open for the fraudsters.”
Medhi also said: “Additionally, the dramatic increases in fraudulent attempts to gain employment might demonstrate improved detection techniques, but they prove that all organisations need to invest in better fraud prevention.”
Customer data: still the most valuable
Following on from a decrease in the number of staff unlawfully obtaining and disclosing personal data, the first half of 2012 has seen the unwelcome return of this crime with a 53% increase from the first half of 2011.
Richard Hurley noted: “Organisations are aware of this threat, and much effort has been put into trying to prevent employees from stealing data. However, evidence points increasingly towards networks of individuals joining forces to try and ‘spread the load’ in terms of the theft of data. Consequently, the risk is spread out and criminals can avoid detection by ‘slipping under the radar’ of the counter-theft measures.”
On that basis, Hurley suggests that organisations “simply must keep their counter fraud measures under review” and “continuously build on them” in order to pre-empt fraudsters’ developing techniques.
Scale of the problem becoming clearer
Arjun Medhi went on to state: “Fraud committed inside an organisation is a threat that’s now taken more seriously than ever before and, as techniques and preventative measures evolve, the true scale of the problem becomes clearer. In a challenging environment of constantly developing technologies, economic hard times and a scarcity of employment, organisations who do not take this threat seriously must recognise that the dangers they face in terms of their financial well-being, ability to operate legally and their reputation are immense.”
Here’s a basic glossary of the types of fraud being perpetrated…
Background to the Staff Fraud Database’s inception
CIFAS launched its Staff Fraud Database in 2006. It currently has 85 members covering over 236 organisations sharing information on frauds that have been perpetrated against CIFAS Staff Fraud Database members.
Those members are drawn from the UK financial services industry, but also from telecommunications, insurance, recruitment and other business sectors.
The launch of the Staff Fraud Database was carried out in consultation with the Information Commissioner’s Office, the Financial Services Authority, the Confederation of British Industry, the Trades Union Congress and the Chartered Institute for Personnel and Development
