Fraud awareness increased significantly during the pandemy
The Coronavirus pandemic has created a lucrative ‘ecosystem’ for fraudsters. A Senior Executive Services (SES) employee of the National Aeronautics and Space Administration (NASA) was sentenced to 18 months in prison for fraud worth more than $350,000 in COVID-19 economic relief loans and benefits, according to the justice.gov.
Another case, as quoted by CNN, was that of a factory employee who faked the results of a COVID-19 test in order to take a break from work. As a result, companies bear cost and productivity losses as they had to halt factory activities for full disinfection.
These two cases are just a few examples of rising corporate fraud cases that have occurred since the beginning of the pandemy. Fraud in the Wake of COVID-19: Benchmarking Report by ACFE shows that compared to May and August 2020 to November 2020, 79% of surveyed organizations said they had seen an increase in fraud.
In addition, based on the latest report by ACFE and Grant Thornton entitled The next normal: Preparing for a post-pandemic fraud landscape, more than half of organizations (51%) surveyed from March to April 2021 admitted to having detected more fraud cases than usual since the start of the pandemy. Obviously, the pandemy has created uncertainty. Where uncertainty lies, there is a great opportunity for fraud to occur.
A tight budget and the implementation of Work From Home (WFH) are some of the factors that drive the increased risk of fraud in the midst of a pandemic. WFH makes almost all business dealings remotely controlled. The lack of face-to-face business control makes supervision and control more tenuous.
The good news is that the increased risk of fraud is accompanied by increased awareness of fraud. Based on the latest report, more than 60% of respondents observed a significant increase in their organizations’ fraud awareness. This increase is likely due to increased educational efforts by anti-fraud professionals and company internals and increased conversation around fraud risk. In addition, increased exposure from the press about pandemic-related fraud schemes may also have contributed.
In response to the increasing fraud and fraud awareness, more than 80% of the organizations surveyed admitted to implementing one or more changes to their anti-fraud program and 38% of organizations increased their budgets for anti-fraud technology. Fraud in the post-pandemic is expected to continue to increase and it is hoped that the organization’s anti-fraud program will be more alert and agile.