Much attention has been given to issues like the Budget deficit and the possible impact of a Trump presidency on our economy.
But there is another issue of growing concern – the rising tide of fraud in this country.
KPMG’s latest six-month fraud barometer shows a 16 percent rise in fraud value over the previous six months – and more alarmingly, the value of fraud from the same period in 2016 has more than tripled.
In the six months from April to September 2016 the total value of fraud in Australia was $442m – twelve months earlier it was $128m.
Where is the rise centred? Much of it has been targeted at financial institutions which now take third place behind government agencies and investors as the biggest victim groups. The rise in fraud using technology is a notable theme here.
22 percent of frauds used technology – including credit card fraud, hacking into financial systems, use of fake adverts, creation of regular electronic transfers and the use of online betting accounts to launder money
Another notable development has been the rise in fraud by professional criminals which now makes up 20 percent of all fraud committed. Still out in front as the main source of fraud is the company insider – which has been a consistent trend over several years.
In terms of demographics, women carried out 33 percent of the frauds this time, down from a high of 39 percent six months earlier. Another notable finding concerned age profile – in Australia it is pretty evenly spread across the age range, whereas the global survey KPMG did last year showed far less fraud being carried out by younger people i.e. below 36.
So what can be done?
First of all, admit the problem. Both public and private organisations openly acknowledge that cyber-attacks are one of the most prevalent and high-impact risks they face, and yet many operate on the basis ‘it won’t happen to me’.
Organisations must keep abreast of the cyber threats, both physical and digital, to ensure the protection mechanisms don’t become obsolete given the pace of technology and business change. You can have a variety of IT protections in place to defend yourself, but it’s all for nothing if you are tricked into giving away the keys to the electronic vault.
Secondly, put more resources, focus and energy into checking whether your company is becoming a victim. 40 percent of frauds in Australia take place over a five year period before being discovered – detection is taking too long.
Thirdly, take special care if you live in Queensland! In the new survey, the Sunshine state has reinforced its unwelcome title as the fraud capital of Australia – more than half (55 percent) of the frauds were reported in Queensland; this is largely attributed to the number of investor frauds .This is a consistent trend from our previous studies.
But it can’t be the sunshine that causes the problem, for our UK colleagues have just issued their own Fraud Barometer, which showed that fraud there had risen by 55 percent with a large rise in cyber-crime – so it is an international problem.
Consumers as well as institutions are increasingly affected – through the rapid rise of technology and online platforms, more people than ever are being targeted by fraudsters who have unrestricted access to a larger pool of victims.
However, we are also seeing the internet being used by consumers who are being tempted to obtain goods and services that they perhaps should have a fair idea are not legitimate. Consumers may often turn a blind eye, or consider this a victimless crime, but there are cases both at home and overseas which show individual victims who ended up paying a high price.
Fraud is as old as mankind – human nature does not change and 62 percent of the frauds in our new survey were motivated by personal greed. But both individuals and institutions need to be aware of the changing, more technological vehicles for the fraud to occur and take preventative steps
Many company frauds are uncovered by sharp-eyed employees noticing something amiss – so establishing an effective whistle-blowing service is vital. We will have more to say on that soon as the government considers responses to its consultation on the protection of whistle-blowers.
The KPMG Fraud Barometer monitors the incidence of fraud cases in the Australian courts, with a value in excess of $50,000. It examines trends and characteristics, with a focus on perpetrators, victims and the nature of the frauds.