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Five Tactics To Fend Off Fraudsters

New IdentityTheft Scam

CEO of Snappt and President of Berlind Properties.

Just prior to Covid-19’s emergence, experts pegged the total annual global cost of fraud at $5.1 trillion. That’s bad — it was reportedly almost as much as the world spent on healthcare per year. But the pandemic has sent that number soaring. Identity theft alone spiked massively during the pandemic. But it isn’t just identity theft. According to a survey by the Association of Certified Fraud Examiners, 77% of fraud examiners have seen a rise in all types of fraud since Covid-19 hit, and 92% expect to see even more fraud over the next 12 months.

Types Of Fraud

For fraudsters, we live in a target-rich environment. Common fraud areas include:

• Cyber fraud

• Payment fraud

• Identity theft

• Unemployment fraud

• Fraud by vendors and sellers

• Healthcare fraud

• Insurance fraud

• Loan and bank fraud

• Bribery and corruption

• Bankruptcy fraud

• Employee embezzlement

• Financial statement fraud

And these are just the broad categories, to say nothing of the niche areas of risk that individuals and professionals in so many industries must be on the lookout for. Our real estate technology firm, for instance, focuses on fraud prevention for the residential leasing industry, and we’ve seen the exact same spike in fraud as the numbers above indicate.

Who Commits Fraud And Why?

The list of types of fraudsters is long, but in general, they fall into four categories:

• Hackers

• Organized crime

• Insiders

• Customers

As to why, that’s where it gets interesting. Two broad trends are both making it easier to commit fraud and, in the case of insiders and customers, increasing the desire to commit fraud.

• Digital transformation: The world is changing around us. Business is moving online and becoming increasingly digital. That’s generally a good thing — with digital transformation comes an easier, more enjoyable customer experience. Does anyone really want to give up Amazon or Uber?

But there is a dark side to digitalization. One of the early memes of the internet was “On the Internet, nobody knows you’re a dog,” thanks to Peter Steiner’s 1993 cartoon in The New Yorker. Nearly three decades later, the updated meme could be “Online, nobody knows you’re a fraud.”

The fact is, fraud is easier to commit when nobody sees you face-to-face. And, it’s easier to avoid getting caught.

Times are tough: Drastic times require drastic measures. It seems obvious that the Covid-19 pandemic would drive a rise in fraud, and historical research supports this idea. It turns out that not only are people pushed to extremes that make fraud more tempting, but also managers who might spot the fraud are often too busy to notice or may have even been laid off.

What To Do?

So, what can leaders of real estate or other businesses do if more people are creating more fraud in ways that are harder than ever to spot? Here are five tips to keep fraud at bay:

• As bad actors innovate and attack new vulnerabilities, you need to educate your team members so they can be on the lookout. It is a never-ending job with no finish line. 

• Dig deeper. More and more, you do business with people you never meet. Make sure you know who they are. Ask for more documentation and thoroughly vet that documentation. If they are a dog, you want to know it!

• Avoid conflicts of interest. Be careful not to have conflicting interests that may lead employees to turn a blind eye to fraud. For example, do you incentivize sales teams for booking new business but fail to hold them accountable if that business turns out to be fraudulent? If so, don’t be surprised if your sales team doesn’t spend much time vetting new prospects.

• Be skeptical. With fraud on the rise, you’re better off being a “glass-half-empty” manager. Expect the worst and be pleasantly surprised if things turn out fine.

• Explore AI and machine learning. Various types of AI can help spot fraud that the human eye misses. In a world where you never meet your customers face-to-face, AI can be your eyes and ears.

As we start to unwind from the pandemic, it is clear that some aspects of life will never be the same. Fraud may well be one of those areas. It’s time to add aggressive fraud detection to your “new normal.”


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Source: on 2021-05-18 07:15:00

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