5 Steps to a Stronger Fraud Detection Program in 2020 and Beyond



by: Terri Luttrell, CAMS-Audit

As 2020 comes to an end, the effects of the COVID-19 pandemic cannot be denied by businesses or communities around the globe. The financial devastation, as well as loss of life and health, has taken its toll. Natural disasters of any kind have historically brought fraudsters out of the woodwork, pouncing on what seems to be a neverending pool of vulnerable victims.

The Federal Bureau of Investigations (FBI) reports that the more catastrophic the event, the more active the fraudsters. COVID-19 is arguably the worst worldwide disaster in decades, and an increase in fraud has been detected on a wide scale. While some of the recent trending fraud schemes are not new, they have been transformed to prey on communities already dealing with unprecedented times. How is your organization moving to solidify its anti-fraud program to mitigate these increased risks?

Based on historical disaster statistics, the U.S. Department of Justice expects overall fraud to rise 10-12% due to COVID-19. In a recent survey conducted by the Association of Certified Fraud Examiners, 77% of member respondents said they have observed an increase in the overall level of fraud, with one-third noting that this increase has been significant. That’s notably higher than in May 2020, when 68% of respondents had seen an increase in fraud, and one-quarter labeled the increase significant.

The pandemic has created the need for organizations to look at their anti-fraud programs to determine if there is increased risk exposure to be addressed. The relief financing that generally follows disaster events unfortunately leads to a correlated increased risk of fraud. The more funding to enter the economy, whether due to hurricanes, wildfires, or a pandemic, the greater the presence of bad actors. Therefore, while COVID-19 is the current trigger for fraud trending upward, organizations should position themselves to prevent future increases. As individuals, we have experience; we know what to do to deter fraud and mitigate risk. However, combatting risks and anticipating evolving risks in the current environment takes a concerted effort by organizations to bolster their anti-fraud programs.

Download the full, complimentary whitepaper to learn 5 key steps to improving your fraud detection program during and after the COVID-19 pandemic.