Fraud encompasses a broad range of deceptive practices aimed at gaining something of value through dishonesty or deceit. It can be committed by anyone or any entity – from individuals to entire organizations and entire industries. Types of fraud include identity theft, phishing scams, and payment fraud (such as account takeover and card skimming), among others.
The scale and scope of fraudulent activity is increasing rapidly. And the complexity of criminal networks means fraud detection can be challenging. But a firm that includes fraud detection in its risk management framework can improve security, ensure compliance and manage loss more effectively.
Many fraudsters are well organized and operate within complex networks that span several countries. They use multiple methods to target specific targets and can evade traditional anti-fraud measures. They are also constantly evolving their tactics to evade detection and can quickly adapt to changing conditions.
Managing fraud risk is an important part of any business. But the costs of fraud prevention, detection, and investigation can be huge. A robust fraud detection system can help mitigate these risks and make the cost of prevention a business expense rather than an unavoidable business loss.
Some types of fraud are more common than others, but all are based on the principle that someone lies to obtain something of value illegally. Some frauds are committed by employees or insiders who exploit their position in an organization to steal from it, such as embezzlement and corruption. Other types of fraud are committed by external parties, such as vendors who submit fake invoices or customers who return knock-off products. There are also occupational frauds, such as bankruptcy fraud, credit card fraud and insurance fraud.