Fraud Trends – Track Now To Predict Future

Fraud TrendsFraud Trends

For the last several months, I’ve been writing a new blog, the Fraud News Update which comes out Thursdays at

The Fraud News Update contains weekly updates of blogs we’ve written with added insights, commentary and topical information on breaking fraud news stories.

Fraud News Update has been an interesting blog to write because it exposes me to a wide variety of fraud trends and there’s certainly no shortage of frauds going on around the globe. Seeing a multitude of fraud stories makes it easier to see where the patterns and hotspots (fraud trends) are in the industry.

Trending Fraud Patterns

While fraud professionals are often exposed to individual fraud news stories, they seldom see those cases in the context of larger global patterns and fraud trends unless they’re in a position to collect, separate and analyze them as a group versus individual crimes.

It’s from the news monitoring context that I happened to notice the significant increase in “God Fraud” cases and wrote a unique blog about that phenomenon.

As I’ve said in previous posts, the God Fraud trend shows no signs of letting up any time soon with stories like: Former missionary pleads guilty to wire fraud and Oregon pastor, wife convicted in tax fraud case hitting the fraud news wire just before we went to print with this week’s blog.

The upswing in God Fraud was news to me before I started seeing, reviewing and analyzing large numbers of stories and fraud trends for review in Fraud News Update.

Other Trends

Multi-story review quickly led to the discovery of other fraud trends that have shown up like the massive Supplemental Nutrition Assistance Program (SNAP) fraud problems going on around the country.

It also quickly pointed out that store owners are complicit in the fraud providing cash benefits to participants in exchange for merchandise prohibited for purchase under the terms of the program.

Traditional Frauds Still Happening

While the fraud trends we’re seeing continue to support large numbers of traditional fraud types like embezzlement it’s important to note that the cases themselves seem to be getting larger in scope and the losses are exponentially more massive as a result.

We’ve often said that fraud may be the difference between being a profitable business and hanging the “out of business” sign on your door.

Case in point, not long ago, we featured a story about long-term embezzlement at a company in Kansas City. The company worked hard to survive the recession only to discover a multimillion dollar embezzlement which ultimately knocked them out for the count.

Fraud trending through stories hitting the wires also supports that phantom frauds continue to be a viable method for employees ripping off the companies they work for. “Phantom” or “Ghost” frauds, as they’re often referred to, appear to be increasing in size, scope and duration as well.

The fact that frauds of this magnitude are not being detected early, and are often occurring for a longer period of time, suggest a breakdown, or lapse, in the internal control processes at quite a few companies around the country. Ironic, since that’s Fraud Prevention 101.

Uniqueness of Fraud

Looking at fraud cases collectively may also point out new fraud trends and types of cases in areas that one might not traditionally think of.

The cooking fuel capers immediately comes to mind as do stories like ones we’ve covered on urinalysis fraud, farmers market fraud, race fraud, ad fraud, counterfeiting vintage wines, disaster fraud, food fraud and a recent favorite: organized marriage fraud.

Analyzing groups of frauds provides other benefits like the methodologies being used to perpetrate the crime or the relationship of the parties involved.

We were recently reminded of this by the number of stories involving family members committing fraud together. From an investigative standpoint, this may serve as a wakeup call that multiple family suspects might be involved.

Fraud trends: The “family that frauds together, stays together” adds to the uniqueness of the crime itself and there have certainly been NO shortage of family frauds for us to write about since we started covering the Fraud News beat with the new blog.

Fraud Causes Death

So many people think of fraud as a “paper crime” but the reality is that “fraud kills.” There have been numerous environmental cases involving White Collar Crime and the impact of those cases on the public.

Recently, however, we began following Trinity Industry’s FCA guardrail case and its health impact on drivers. This serves as a reminder to everyone that while fraud may very well be a “paper crime” it has the potential to maim, injure or kill innocent people who are simply in the “wrong place at the wrong time.”

This proves the point that the result of a “paper crime” is often significantly more than a “paper cut.”

Fraud’s Big Business

Where there’s money there’s fraud. In case anyone’s forgotten, we’ve recently been reminded just how big a business D1 College Sports is with the bombshell revelation about the massive academic fraud at UNC, which has spanned an 18 year period and an estimated 3000 people involved.

That story will continue to grow in size and scope over the next couple weeks and it should be interesting to see how the NCAA responds. I’m not sure the NCAA has enough paper to write down all the possible rules violations that appear to have occurred at UNC but they’ll have fun trying.

That case is going to be a major wake up call for the compliance departments at all D1 schools who will certainly feel the heat as well.

The Bottom Line

Through our recent experience writing the Fraud News Update, we’ve seen a number of fraud trends, some of which we’ve talked about today.

Oftentimes when one looks at frauds individually, there’s no connection to a pattern. However, when individual frauds are looked at as a group, across the spectrum of all frauds taking place in a demographic area, it’s much easier to see the patterns and predict the future.

The ability to predict future frauds is often based on the ability to track current fraud trends. The key to this activity is to forecast the frauds, deploy preventative measures and get there before the bad actors do.

Get there first and it’s easier for you to prevent nefarious activity. Get there after the bad actors do and you’re likely in for a good ol,’ behind the woodshed, financial whoopin, of epic proportions.

Why is this important? Aside from the significant financial loss impact, negative publicity, lawsuits, shareholder lack of confidence, diminished ROI etc., the failure to place importance on fraud trends, and forecast future activity, is an indicator that your company’s fraud program is more reactive in nature than it should be. And that, ladies and gentlemen, is bad.

Predicting fraud trends: what’s in your company’s intelligence gathering back pocket?

Those are our insights…what are yours?